Steven - My husband is a financial advisor, so I'm forwarding your email to him. He can respond to your points better than I. My guess is that, in the main, he will agree with you. I'm also guessing that he will tell you to do nothing with your TIAA-CREF fund. Don't try to recoup the losses - they will recoup themselves as the market corrects itself. By moving the money in and out of different funds you will only incur additional fees for commissions, thereby slowing down the process of regaining your losses. Unethical brokers do this so that they will get additional commissions, but it is improper for them to do this (even if the client thinks that's what they want) and is known as "churning." (I can't believe I know all this stuff! I must really listen when he tells me this stuff!) Naturally there are exceptions to this rule of thumb, and you have to have an advisor that you trust so that you can know when to listen to him/her and when you are being screwed. This is the reason to have a financial advisor, not just a broker. Brokers work for commissions, and so do planners, but there are differences. A planner wants you to be his/her client forever, so they do what's best for you even if the commissions aren't as good in the short term. Brokers don't think this way. Also, brokers usually give everyone the same advice because they only think about individual stocks and mutual funds. Planners have a collaborative role because they help you develop a complete financial plan that is tailored to your needs and anything that's done is based on this plan.They're more like counselors or consultants than salespeople. (I REALLY can't believe I know all this stuff. And I'm also surprised at how worked up I got over this. Bottom line - don't listen to your broker, but do listen to your financial advisor (i.e., Matt. You could transfer your account to him . . . I don't think that costs a commission. And I'm only saying this because he is too modest to say it himself and I think he's the smartest advisor ever. Plus, CREF doesn't have many personal advisors - just those phone people. And I know this because Matt used to work for them.) Any way, I'll forward your original email to him and some parts of this one to the list serve. Don't tell him I got so carried away, okay? Cindy M.
At 12:00 AM 1/14/2002 -0500, you wrote: >TIPS Digest for Sunday, January 13, 2002. > >1. Re: Any stock advice? > >---------------------------------------------------------------------- > >Subject: Re: Any stock advice? >From: Stephen Black <[EMAIL PROTECTED]> >Date: Sun, 13 Jan 2002 23:53:30 -0500 (EST) >X-Message-Number: 1 > >On Sat, 12 Jan 2002, Richard Pisacreta, Ph.D. wrote: > > > > > Any of you Tipsters study the stock market? Can you off the > > rest of us any advice for next year to offset the terrible > > returns of the last two years? Any of you in TIAA-CREFT > > pension plans have any advice on how to distribute future > > allocations? > >Perhaps we can justify this question on TIPS by suggesting it >raises an important psychological question. This is why people >allow themselves to be guided by experts who have no expertise. I >speak of brokers and "financial advisors". If no one goes for >this, I say, what the heck, it's a slow week-end on TIPS, and >it's a fun question. > >My understanding is that the stock market is "efficient", which >means that the price of a stock fairly represents all information >available about the company and its prospects. Consequently, >there are no bargains and no dogs. Aside from degree of risk, it >doesn't matter which stock you choose. Forget analysis. I did a >web search to confirm the above, and came up with an apparently >authoritative analysis of the efficient market hypothesis at >http://www.investorhome.com/emh.htm. Bottom line: > >"If markets are efficient and current prices fully reflect all >information, then buying and selling securities in an attempt to >outperform the market will effectively be a game of chance rather >than skill." > >and > >"Many novice investors are surprised to learn that a tremendous >amount of evidence supports the efficient market hypothesis" > >Corollaries: > >1) A monkey throwing darts at a page of stock listings will, on >average, do just as well as the finest financial advisors money >can buy. In fact, the Wall Street Journal runs such a contest >yearly (using reporters rather than monkeys, about the same >thing), This year, the dart method outperformed the experts (see >http://www.onegroup.com/ReadingRoom/stockpick.asp) > >2) Never listen to a broker's recommendation. As they have no >more ability to predict stock movement than anyone else, their >recommendations will be based on how your choice can earn them >the most money. Brokers are always conflicted. Consider why they >prefer to earn commissions off you rather than putting their >alleged expertise to work on their own behalf. > >3) With the exception of the above, never listen to >anyone's advice on the stock market. They know as much as you, >which is to say, nothing. > >4) Since stock-picking is futile, choose stocks that are fun to >hold. I like high-tech genetics companies. Not only is the >science amazing, but the potential health benefits are >staggering. The fact that they're all money-losing and likely to >go bankrupt should only be mildly discouraging. > >-Stephen >------------------------------------------------------------------------ >Stephen Black, Ph.D. tel: (819) 822-9600 ext 2470 >Department of Psychology fax: (819) 822-9661 >Bishop's University e-mail: [EMAIL PROTECTED] >Lennoxville, QC >J1M 1Z7 >Canada Department web page at http://www.ubishops.ca/ccc/div/soc/psy > Check out TIPS listserv for teachers of psychology at: > http://www.frostburg.edu/dept/psyc/southerly/tips/ >------------------------------------------------------------------------ > > > > > >--- > >END OF DIGEST > >--- >You are currently subscribed to tips as: [EMAIL PROTECTED] >To unsubscribe send a blank email to [EMAIL PROTECTED] Cynthia Bainbridge Mullis, Ph.D. Asstistant Professor of Psychology University of Wisconsin - Whitewater 800 West Main Street Whitewater, WI 53190 (262) 472-3037 Office (262) 472-1863 Office Hours - Fall 2001 MWF 11-12:00 Thurs 2:00-4:00 --- You are currently subscribed to tips as: [EMAIL PROTECTED] To unsubscribe send a blank email to [EMAIL PROTECTED]
