Oct 15

Fuld’s Gold

A fool and his money are easily parted, actually that should be the kids favourite line for Dad, especially every Saturday when its pocket money dole out time, I swear those four scare me at times!

But for now forget fools and their money, or even fools gold, it is now Fulds Gold. Yes, Mr Richard Fuld of Lehman Brothers fame, the CEO who earned between $250 and $500 million over the last decade gets to keep the lot, even as the mess he and his ilk created is being shoveled into black bin liners labeled and handed to staff with their pink slips!

Take the likes of him and multiply them by ten, take those one rung below him in the investment banking world, on one tenth of his salary and multiply them by several hundred. Then take those on the next rung, on one hundredth of that salary and multiply it by several thousand. Collectively they have earned hundreds of billions of dollars and they get to keep the lot. Now ask yourself why the American tax payer, on Main Street, hates Wall Street!

So as all those, Masters of the Universe, rush off to their manicured holiday homes, to get in touch with themselves, where does it leave you and me, other than a little peeved.

Well to be honest we just have to accept that in every decade there is seemingly a, hindsight enhanced, blatantly obvious convergence of issues that leads to a return to normality. It is so irritating to have to admit it, but as we look in the mirror the temptation is to scream, I told you so, you idiot. Grandmothers saying, If it’s too good to be true it probably is,  also come to mind and irritate!

Ok then, so we are in a flat spot, so what now? Do we cry shamelessly, or crawl into a dark hole and die? No of course not life goes on, even if our investments or pension monies are down. You can either be a misery guts or you can just look at the reality and know that the stock market, the quality stocks that is, are the best investment of any class of asset over the last 10, 20, 50 or 100 years, we need to stop looking at our feet and look at the horizon.

Quality investments and strong income producers may get dragged down by sentiment and an overall herd instinct, but they recover quicker than the small caps or penny stocks, these minnows may never recover at all and in some cases should have been ignored to start with.

All of history, it was once said, is just a repetition of mans inability to learn from his own history. Whether it’s 87, 90, 98, 2000 or 2008, these are in the big picture simply corrections that wash out anomalies and you must maintain your quality investments and stay out of cash, cash is the killer long term!

There is one thing you need though and that is quality advice. Buy and hold does not cut it in the real world. GM is the same price today that is was in 1958, that’s 50 years of torment, yeah millions of cars and other products produced maybe, but a company run by accountants and trapped in a pricing time warp!

So, you need to find that advisor you first like and trust, and secondly receive good active ongoing service from. There is no security in placing your cash into some banking or insurance product, it all ends up on the stock market anyway. Take, or rather get, a Bespoke view, demand advice that is tailored for your needs not the needs of the institution flogging it to you. Ensure that the person you are with actually cares about you, works out accurately your needs and clearly assesses your risk profile.

Finally remember this, there are only three options, Buy, Hold or Sell, that is all there is, it’s not rocket science. The third option is not an option, the second is clever, but the first option, in three years from now, will make you look like the new Warren Buffett. I’ll leave you with this thought.


How will I apply these wise words at this Saturday’s pocket money scrum down? I have yet to decide, but may need back up!

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