By Mike Adams Her husband died in February 1978. She sat down with a financial adviser and did some planning; the FA believed she would be financially stable. Her late husband’s life insurance was enough to replace his income at the interest rates prevailing in 1978. Their stockbroker bought a couple of dividend stocks for growth and bonds for income. It seemed the widow would be set for the remaining years of her life… BUT!
By the summer of 1986, the bonds had matured, and
By Mike Adams One of what I call my industry’s “dirty little secrets” is how analysts are paid. They are not fiduciaries and therefore do not have to make recommendations in the best interests of clients. When I worked for the regional and big brokerage houses, analysts got their income from their salary and their bonus. The bonus was based on three sources: Performance of their recommendations Trading commissions in the stocks they covered New business from IPOs, mergers, an
Times like these do not scare us out of the market. We’ve been here before and undoubtedly, we will see such volatility again. In Thinking Fast and Slow, Daniel Kahneman describes an experiment assessing investors’ propensity for risk. Participants were given $20 and asked to decide whether or not to invest $1 each of 20 successive times. A coin was to be flipped each time and if it fell heads, the investor made money, but if tails, the investor lost. Every time the invest