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| This is exactly my point about financial services | |
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| Tweet Topic Started: Aug 5 2008, 08:40 PM (149 Views) | |
| Horace | Aug 5 2008, 08:40 PM Post #1 |
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HOLY CARP!!!
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I just read the wiki page on Warren buffet. Lo and behold he says exactly what I've thought for a long time about the ridiculously compensated wall street types. Buffett: repeatedly criticized the financial industry for what he considers to be a proliferation of advisers who add no value but are compensated based on the volume of business transactions which they facilitate. He has pointed to the growing volume of stock trades as evidence that an ever-greater proportion of investors' gains are going to brokers and other middlemen. Is this not the case? |
| As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good? | |
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| ivorythumper | Aug 5 2008, 09:14 PM Post #2 |
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I am so adjective that I verb nouns!
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There is a lot of money in money. |
| The dogma lives loudly within me. | |
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| QuirtEvans | Aug 6 2008, 01:00 AM Post #3 |
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I Owe It All To John D'Oh
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I don't have data for you, Horace, but I doubt it's true. As just one example, because of deregulation and the advent of discount brokers like Schwab ... followed by deep discount brokers ... commission rates on stock trades for individual investors are tiny, compared to what they were a few decades ago. You'd have to do way more trades to generate the same dollar volume of commissions. |
| It would be unwise to underestimate what large groups of ill-informed people acting together can achieve. -- John D'Oh, January 14, 2010. | |
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| jon-nyc | Aug 6 2008, 09:30 AM Post #4 |
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Cheers
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Hmmm... a couple of points. Keep in mind financial services encompass a lot of things, and a lot of people, and by no means are they all well paid. Pure investment banking assists in corporate transactions, like when a company buys another, does an IPO, sells a division, issues bonds, etc. This tends to be a small number of people who are, generally speaking, highly paid. These would be the types that Mr, Buffet would interact with the most, personally. What I find confusing is the second sentence - this seem to imply that he's talking about financial advisors - i.e. the guys that manage the money of individuals. He seems to imply that the increased volume on the exchanges is evidence that these guys are generating churn to increase fees. They may be doing that, but its wrong to point to increased trading volumes as evidence. In fact, the massive increase in trading volumes has a single primary cause that has nothing to do with retail - namely 'black box' or algorithmic trading. In the last 10 years there has been an explosion of firms that write computer programs to trade stocks automatically based on observed patterns - vacuuming up nickels, so to speak. One of my buddies at Nasdaq told me a few years ago that one of these firms regularly did 10% of total exchange volume. So that logic is flawed. But back to the claim - are there a bunch of financial advisors out there who add little to no value to their customers? I think so. FWIW, I'll add that most of these people aren't really 'Wall Streeters' - they're located in Everytown, USA. And most of them aren't all that well paid by Wall Street standards. THere are also a bunch who, rather than churn customer accounts, steer them toward funds with high fees and sales loads. For example, companies like Ameriprise have armies of poorly qualified sales people that steer individuals toward funds with ridiculously high fees. (And don't even get me started on annuity salesmen.) |
| In my defense, I was left unsupervised. | |
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| Horace | Aug 6 2008, 07:26 PM Post #5 |
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HOLY CARP!!!
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Thanks for your thoughts, Jon. |
| As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good? | |
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| Axtremus | Aug 6 2008, 07:51 PM Post #6 |
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HOLY CARP!!!
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For a few Holoweens now, I've been wondering whether I'd see a trick-or-treater disguised as an annuity salesman. S/he'd get extra candy. |
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| Red Rice | Aug 6 2008, 07:53 PM Post #7 |
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HOLY CARP!!!
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Release the hounds.
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Civilisation, I vaguely realized then - and subsequent observation has confirmed the view - could not progress that way. It must have a greater guiding principle to survive. To treat it as a carcase off which each man tears as much as he can for himself, is to stand convicted a brute, fit for nothing better than a jungle existence, which is a death-struggle, leading nowhither. I did not believe that was the human destiny, for Man individually was sane and reasonable, only collectively a fool. I hope the gunner of that Hun two-seater shot him clean, bullet to heart, and that his plane, on fire, fell like a meteor through the sky he loved. Since he had to end, I hope he ended so. But, oh, the waste! The loss! - Cecil Lewis | |
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