Dilbert Creator: The Financial Industry Is The World's Biggest Scam
Fred Prouser/Reuters
In a new post titled "How to make more money in stocks" Adams, who also holds a degree in economics, argues that the financial industry is the world's biggest scam and that investment advisors make stocks risky.
From Adams:
An investment advisor needs to justify his pay, and that means pretending to have stock-picking magical powers that science has never discovered. Every study on the topic shows that the professionals generally don't beat the market average over time. But they do cause a lot of churn that causes a lot of unnecessary taxpaying on gains. And the professionals charge enough to take perhaps 25% of your potential annual gain in fees.
Meanwhile, wise people such as you buy your market index ETFs and avoid all of the risks injected by the professional investment advisors. But your potential stock gains are suppressed because so many other people are using professional advice and losing money. That makes the category of "investing in stocks" look riskier than it is.
So my suggestion for permanently lifting the value of the stock market to new sustainably high price-earnings ratios is to pass a law making it illegal to offer financial services without disclosing the truth - that they are mostly a waste of your time.
…I know you don't like big government getting involved when it isn't needed. But the financial industry as it stands now is the world's biggest scam, and most of us agree that the government is the right agency for rooting out crime, pyramid schemes and the like. And I think most people would agree that putting warning labels on cigarettes, and nutrition information on food, has served us well. It's time to do the same with investment advice.
Adams suggests that the government do for investment advice what it did for nutrition: set up a pyramid "that shows most people should own broad market ETFs under a certain set of simple conditions."
Ann Marsh's piece in Financial Planning, which first pointed us to Adams' post, has planners pointing out that advisors do more than just pick stocks. They keep investors from acting impulsively.
Josh Brown, CEO of Ritholtz Wealth Management in New York, tells Marsh this "this is the type of thing you see toward market peaks. ...It's just one more form of overconfidence."
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- Saudi Arabia wants China to help fund its struggling $500 billion Neom megaproject. Investors may not be too excited.
- Catan adds climate change to the latest edition of the world-famous board game
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- JNK India IPO allotment – How to check allotment, GMP, listing date and more
- Indian Army unveils selfie point at Hombotingla Pass ahead of 25th anniversary of Kargil Vijay Diwas
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market