Balliett Financial Services, Inc.
I've been researching investments for clients since 1968 and managing the portfolios of some clients since 1984, so I've had lots of opportunity to learn from their behavior. In my opinion, here's what people new to investing need to know:
One famous survey revealed that people who pay a pro to manage their money are doomed to disappointment. The common expectation among the rookies surveyed was a total return after expenses of 20% year over year.
It's hard to imagine anyone who can do that well managing portfolios for anyone other than immediate family members.
What do you get when you hire a pro to manage your money? Someone to do the grunt work for you-the research, decision making, the buying and selling, and the recordkeeping and other administrative chores.
Also, you may or may not get a reasonable chance of making more money by investing than saving. Over time, inflation figures to lessen the value of your savings by 4% yearly. But good investment overcomes inflation.
The odds are heavily against your making money every year. A few people seem to do so, or nearly so. But even the best of the well-known investors have had gaps in their string of successes, and those include investment superstars Benjamin Graham, Warren Buffett, and Jim O'Shaughnessy, among others.
Don't think you need only to invest in an index fund. Those who believe that's the easy sure thing have done way too little homework. The usual choice is the S&P 500 stock index or the Dow Industrials. AAII's research shows that each had significantly negative performance three years in a row-2000, 2001, and 2002.
I know of no commonly referenced index that's enjoyed long-term consistency.
Don't think investing successfully is easy. The most successful investor I know is an old friend of mine from another life, and his identity is known by almost no one other than his wife and children. He retired before age 50 to free up time to run his own money. A few years later, in 1990, he lost 3%. Since then, he's made money every year-including +97% in 2003.
But managing money well isn't easy, he would tell you. He puts in an eight-hour workday five days weekly, 40 hours a week, minimum, doing so much reading that it's a wonder he isn't blind.
He pays five figures yearly for subscriptions to little-known research reports.
He devours the weekly Barron's. Every week.
He reads a stack of stock prospectuses every day. He reads both annual and quarterly reports, too.
He has read Ben Graham's books over and over again, and every other book about value ("fundamental") investing he has found. He continues to search for more.
He reads and rereads every transcript of Buffett's discussions at shareholder meetings, marker in hand.
To free up time for family activities in the daytime, he often gets out of bed and works between 2:00 a.m. and 4:30 a.m. before going back to bed.
He is the most successful investor I know. If you'd hope to match his successes, do as he does.
At Balliett Financial, we help our DIY clients by sharing our research, so that they can save time and effort by focusing their own research on securities we think are worthy of investor interest, time, and attention.
We find and create portfolios designed with absolute (consistent) returns in mind. We put our latest benchmark models into the section of our Web site reserved for clients. To enter, they use assigned identification and passwords.
In our monthly 12-page newsletter, we update our four benchmark model portfolios for our DIY clients, alongside our full lists of no-load bond funds (for income) and no-load stock funds (for capital appreciation).
On the opening page at BalliettFS.com, we freely share (with clients and potential clients alike) the securities we've identified as worthy of immediate investor interest, time, and attention. Click "Daily investment message" in the upper left corner.
Also, we provide our hands-on portfolio-management services for clients who delegate. Over time, we've drawn investment clients from 30 states. We've provided such services since 1984.
-Gene Balliett, chief investment officer
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Balliett Financial Services, Inc.
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