Michael Lewis, who authored “Moneyball,” “Liar’s Poker” and “The Blind Side” spoke to CNBC this morning about the two key themes that degraded our financial system over the past 30 years.
I agree with Lewis that the solutions are quite simple: financial firms must go back to choosing between being a dealer or being an advisor. We cannot afford them to be both. Cross-selling in this area is deadly for clients and the stability of the banking sector and we already learned this lesson in the 20’s and 30’s. The real economy is paying for our naivete on this point again today. Second, the firms that chose to be dealers and concerted risk takers must do so on their own dime. This means a migration back to the old model of partnerships where those making the bets can reap the rewards and fall on their own sword as needs must. As soon as the risk-takers are gambling with client capital, in a tax-payer-backed bank, the depths of greed and recklessness are literally bottomless.
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I’m not sure we will ever get the broker/dealers ever to act in the best interest of the client. They always seem to cater to you, listen to you, nod their heads to get your confidence, then go back to their self-serving ways. Heck, they have families to feed, mortgages, tuition bills and save for their own retirements to consider. Do you really expect them ever to act in your better interests? I haven’t found a one yet but I’m looking.
BTW: The Distribution Count is steady and building since the Apple-induced IBD follow-through day last week. Even though there are winning stocks plodding along, the general market averages are appearing to be rolling over, or building a top. And it is becoming unseasonal. Be prudent. Be careful. Cash is not trash.
Kind of interesting of what J.Tavakoli thinks of Michael Lewis here:
http://www.huffingtonpost.com/janet-tavakoli/michael-lewis-junior-sale_b_498781.html
Seems Mr. Lewis was a risk seller for a period in his life. Nevertheless, I still enjoy his movies/books for entertainment value even if some of the facts are “distorted” 😎
Experience working on the sell side is an important part of a full education in this field. I also spent the first 6 years of my training working on the sell side. Incredibly useful–taught me everything about what not to do with money. Great inverse mentors. Helped me develop our present approach and client focused method in response.