A retail broker I worked with many years ago sends an email asking about Freddie Mac (FRE):
"It looks cheap, the government won’t let them go bust, its a potential turnaround."
Mind you, this guy has been on the wrong side of every disaster known to Wall Street: Bear Stearns (BSC), Fannie FNM), AIG, Lehman (LEH), Ambak (ABK).
He is a phenomenal salesman, but just the worlds worst stock picker. As bad as the worst of the investing public. Loves Mad Money, worships Cramer, but has managed to learn nothing in 20 years on the street.
Its not the specific stock picking, but the methodology that is so suspect — no stop losses, a lack of any planning, TV driven — worst than random dart throwing.
If he just raised money and let a professional manage it, he’s have billions under management and be wildly successful.
The imagination reels. We should set up a Contra fund and fade all of his choices.
UPDATE: July 10, 2008 1:30pm
Note: I was referencing one specific guy and not the entire retail world. Truth be told, my experience with Commission brokers has been a lot more incompetence (than criminality–tho that exists), some really talented guys, and a lot of flotsam and jetsam. With fee based, it seems to be reversed — more competence, less excess activity.
The general quality of the advisor community — like everything else — probably fits nicely into a bell curve, with some exceptional advisors, some folks who should be doing something else, and a bunch in the middle.
As one emailer correctly notes: "Pointing to only one part of that bell curve — or generalizing that "retail" sucks — hardly seems cricket."
Fair enough. Consider this my correction.