March 26, 2003
track records before investing cash
past several years, I have watched our economy sputter.
My wife and I watched as our big dreams for
early retirement evaporated. We are partly responsible
for the difficulties. We, no, really I am mostly the
one who pushed for higher returns on investments. We
kept reading about these high-technology projects that
had tremendous valuations for their stocks. I insisted
that we jump in and enjoy the returns. When things began
to fall apart, the advice my wife and I received was
to “stay the course; stocks are a long-term investment.” We
trusted our investment advisors. We lost about 60% of
Was our tremendous loss related to the integrity of
those who sold the investments and counseled us? Was
this an integrity issue for those who were the leaders
of the companies in which we invested? I am angry, embarrassed
and a lot poorer. Whose integrity can one trust?
You feel taken advantage of, and there are legitimate
reasons for your feelings. Here is the irony and the
sad truth of a seemingly modern and wealthy society:
Long ago, in the Middle Ages, many of the leaders of
the Catholic Church kept language and education away
from many deserving and capable people. As a consequence,
freedom was kept in check and a certain theological aristocracy
operated pretty much as it chose.
situation today is remarkably similar. Medieval priests
reading and speaking Latin have been
in our era by balance sheet wizards and magicians of
money. They are well trained in these modern times to
speak in a language calculated to be beyond the “average” wage
earner whose dollars have disappeared. Financial power,
consolidated in the hands of the few -- no matter how
well educated -- can too easily place personal greed
and insider loyalty far above integrity.
beginning or unsophisticated investors to participate
in these inflated valuations,
by members of the “financial wizards club,” is
wrong. Keeping them in these inflated transactions long
after they should have exited is borderline corrupt.
It may not be illegal, but most assuredly it is immoral.
Too often the “off the street” investor was
losing a small family fortune while those in the know,
who invested early, were taking high profits and bailing
Obviously, there are honest professionals in finance
and investments. The very best way to learn about advisors
(financial and others) is to review their track records
with those who have worked with them before. History
is often an excellent way to predict or at least better
understand the future.