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Sound Advice: September 27, 2023

Five Stocks To Buy Today

It’s getting increasingly difficult to listen to commercials on financial network media.  In all cases, the hook is an ostensibly unusual discovery by the sponsor that would have you believe that they alone have the map to untold wealth.  And, surprise, surprise, for just one phone call, they will be happy to send you, at no cost, information about their latest and greatest extraordinary scam.

One of the more amusing examples is the gentleman who can’t wait to tell you about the technique he has developed that, according to him, has generated returns of 5% a month.  Since many investors would be quite satisfied if their portfolios increased by 5% a year, the only reasonable response to this nonsense is controlled regurgitation.

Then there’s the well-known West Coast investment company that wants you to know that they are different because they only do better when their investors do better. Not only that, but they don’t charge commissions. 

Guess what?  With rare exception, fees for investment managers rise and fall in line with changes in the values of the portfolios they are managing.  And, no, investment managers do not charge commissions for transactions. Transaction fees, where they still exist, are charged by brokerage houses.

Even more absurd are lists of stocks and funds to buy now.  Forgetting about the fact that there is nothing in the financial literature to support the likelihood that these recommendations will be successful, one wonders why the recommendations are almost totally focused on the buy side of the equation.

If we buy, when do we sell?  That’s the hitch since the goal is a prospective increase in value, which is only locked in after the investment has been liquidated.  Yet one would be hard pressed to scour Wall Street firms for lists of stocks and funds to be sold.

Under the heading liquid investments, the rare exception of what’s to be held forever would be market index funds, which are widely available at modest cost.  Over time, that route will be more likely to provide worthwhile returns than the mistaken belief that there really are wizards who hold the secret to successful investing. 

There aren’t and they don’t.

 N. Russell Wayne, CFP

Any questions?  Please contact me at nrwayne@soundasset.com

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