Monday, October 3, 2011

Who is the Investor?

The stock market took another plunge today.  A volatile market, so they say.  Reliable news sources were full of the usual patter about how investors dumped stock.  Not so long ago the same reliable news sources reported on investors in feeding frenzies.  It’s not true.  Those dumpy sellers and frenzied feeders are not investors.  They are merely managers of other peoples’ money.  I am an investor, along with hundreds of thousands, maybe millions, of others whose retirement funds and savings are invested in the stock market.  We pay the money managers to be good stewards of our investments, but good stewards are hard to find.  There is too much distance between my money and their trades.  My money is hidden within huge funds so that the funds appear to be owned by no one in particular.  They are just big piles of money that money managers get to play with as they bet this way and that on rumors, unverified information, the mood of the market or whether Vladimir Putin’s Full Monty photo made it onto a campaign poster in some obscure Siberian town.
Who can blame them?  They don’t make any money for themselves off the performance of my investments.  They make it, like any gambler, off lucky winning streaks, both long and short, abetted by some skill and good timing, accidental or otherwise.  They make it off fees for trading, fees for managing, fees for packaging and fees for things that are hidden somewhere in their statements.  I’d like to have some respect for them, but just can’t bring myself to it.
I’m luckier than most.  My investments are being managed by a middle man of sorts, a local trust department that works hard to find and stick with funds and fund managers focussed on company performance with products and services in markets that have been well analyzed.  The net result is fewer wild bets, a little less on the upside and a lot less on the downside.  But that does not keep me, or others like me, from suffering fools not gladly.

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