For the last two years, investors have had the wind at their backs and seemingly everything has had its time in the sun.
Mining was strong. Banking was strong. Consumer discretionary was strong. Tech was strong. Crypto was strong. Marijuana stocks were strong. IPOs were strong.
Capital raises were well bid afterwards. A lot of stocks that put out bad news still bounced hard off lows. Even travel stocks had time at the party and there were lots of takeovers.
You could be forgiven to think that the stockmarket is easy.
We’re starting to see a few cracks though… and 2022 is already proving to be more challenging, and to make it even more difficult, many new and novice investors who have more recently entered the market have never experienced a down, or highly volatile market.
What do you do in these markets? Do you hold and hope? Do you buy more and hope? Do you sell in the belief it is better to cut your losses now?
What investors need now more than ever is advice.
Fun fact. Even doctors go to the doctor. Even dentists have their teeth checked. Professional athletes have coaches. Even if you are the top of your game you need to be constantly learning and improving. Not everyone can be right all the time, and we carry our own biases very tightly. It’s very hard to admit when you are wrong, especially when there is no finish line!
Just go and read a few chat-room threads. Sometimes you’ll be that guy arguing that your poor performing ‘investment’ is a buying opportunity, sometimes you’ll be the guy that is arguing that the other guy’s poor investment is due to their own stupidity – and that they should sell out and buy the thing you are in.
There’s another option…don’t do either! Both sides can have valid points, but neither is a professional investment adviser and, as ASIC has raised as an issue, they are always ‘talking their own book’ and often behind fake names.
Some things to look for in an adviser and their ‘advice’:
- Experience. Markets move in very long cycles. The reason for the crash we had for COVID-19 was different to the one we had for the GFC, which was different to the one for September 11 or the tech crash. You don’t really want to know if they were ‘right this time’, but that they’re right ‘more often than not’ and ‘over the long term’.
Because believe me, if you are truly ‘in the stockmarket’ there will be some very dark days. You’ll want someone who has seen it all before.
- Regular and reliable. If you’re in direct shares, do you want to be the guy that hears about the next big opportunity first, or last? How many phone calls do you think a stockbroker can make in a day?
Do you think your good-nature and wit automatically make you the first phone call? Do they ring you three times a day? Do they contact you when they aren’t pitching a trade or a placement to just let you know what’s going on?
Or are they always on holiday, or on their boat and you end up talking to their PA more often than them…
- Conflict. Herein lies the biggest problem with financial services. Stockbrokers are normally paid a fee when you make a transaction. In fact, most online brokers, with the notable exception of Marketech, all make a profit from your transaction, so they benefit more when you trade more shares.
So, maybe you have a good broker. Maybe, they just want you to make money, and in making more money, they will benefit from a longer career, and you’ll recommend them.
But in the back of your mind, you always ponder that one time they switched you from NAB to WBC on the last Friday of the month just before they went on holiday. Good advice? Or brokerage…
Now you aren’t 100% sure if that advice is in your best interests. So perhaps you stop taking all of it. And then the advice is worthless – like only taking some of the pills your doctor gave you.
Filling the growing advice gap
The challenge facing investors is that a vast number of financial advisers have left the profession. Most retired when commissions were phased out a few years back and new education benchmarks that looked only at university qualifications, over practical experience, forced many into early retirement. Now we’ve got only about 15,000 licenced financial advisers left to service an adult population of 20+ million. The numbers don’t add up. No wonder most investors wander on their own path, rather than look for professional advice.
At Marketech we are looking to fill that gap. Through smart tech and best of breed partnerships.
Sign up to our professional grade trading platform for $45 a month with $5/0.02% trades and you not only get your own HIN, live-streaming pricing, live alerts, technical charting and full function mobile app, you will also receive free access to the ‘Marcus Today’ newsletter for two months! It normally goes for $95 a month (or less if you commit to a longer term), so there’s $190 free right there if you don’t already think our platform is compelling enough…
We’re not taking a clip if you subscribe, they’re not taking a clip if you subscribe to Marketech – but more importantly, they’re not taking a clip on your brokerage so you know the advice is designed to sell the newsletter over the long term, with continual good general advice and opinion – in the same way that we want more people to buy our platform over the long term, we are driven to make sure the platform is the best.