Dear Mr. Minack,
I read an article on Business Insider indicating you are retiring from your position as an investment strategist with Morgan Stanley. Let me start by wishing you well in your retirement.
The article referred to "amazing" investment advice you gave just before you resigned. I am always curious about the advice given by Wall Street pros like yourself, so I couldn't wait to learn details about your "amazing" advice. The article noted that you didn't explicitly give this advice, but you demonstrate why any other investment strategy is "idiotic." Here's the "amazing" advice:
- Don't pick stocks.
- Don't time the market.
- Buy low-cost, tax-efficient index funds.
Realistically, there is nothing "amazing" about this advice. It's set forth in books written by me, Jack Bogle, Burton Malkiel, my colleagues Larry Swedroe and Carl Richards, William Bernstein, Jason Zweig, Allan Roth, Rick Ferri and many others. It's supported by hundreds of peer-reviewed, academic articles.
Here's what's "amazing":
Some of your colleagues in the securities industry have no shame in professing to be unaware of the research supporting these views. As I stated in this blog post, Christine Marcks, the president of Prudential Retirement, had this to say on Frontline's excellent report, "The Retirement Gamble": "Yeah, I haven't seen any research that substantiates that. I mean, it -- I don't know whether it's true or not. I honestly have not seen any research that substantiates that."
I guess what makes your advice "amazing" is that it is coming from a Wall Street insider. If investors followed this sage counsel, there would be no need for "investment strategists." More to the point, the brokerage industry as we know it would collapse. Its business model is premised on keeping this information from investors and selling them on the false hope they can "beat the market" by doing everything you have concluded is unwise: picking stocks, timing the market and investing in high management fee, actively managed funds that are likely to underperform their benchmarks over the long term.
Now that you have some time on your hands, I hope you will turn your considerable skills towards educating investors on why they should avoid entrusting their hard earned money to retail brokers, like your former employer. Those of us who are on the front lines of this effort could benefit from the participation of an insider like yourself.
Doing the right thing for investors has its own rewards. It's not as lucrative as selling snake oil as vitamin tonic (as Jon Stewart famously said to Jim Cramer), but it's the right thing to do. You will sleep better at night and will have a well-deserved feeling of doing good for investors by helping them avoid becoming victims of Wall Street brokers.
Isn't that what retirement is all about?
Dan Solin is the director of investor advocacy for The BAM ALLIANCE and a wealth adviser with Buckingham Asset Management. He is a New York Times best-selling author of the Smartest series of books.
The views of the author are his alone and may not represent the views of his affiliated firms. Any data, information and content on this blog is for information purposes only and should not be construed as an offer of advisory services.