Wall Street Performance Is Ruining Investors

With more than two decades experience in the investment industry, I am more than qualifed to give an informed opinion on what is wrong with Wall Street professionals.

So what is wrong with Wall Street professionals?

Wall Street professionals are concerned solely with the preservation of their cushy jobs and having better "performance" than their peers so they can receive more compensation. They don't give a rat's ass about whether their clients make money or not, only how they can make money from their clients.

It is perverted as to the way Wall Street calculates "performance". Wall Street looks ONLY at realtive performance - how various professionals stack up against each other. Wall Street NEVER looks at absolute performance - whether the professionals actually made money for their clients.

A friend of mine went to see his 'other' financial advisor recently. The value of the portfolio held with this 'advisor' fell by 25% in the past year. When he asked about the poor performance, he was told - "What poor performance? You greatly outperformed the averages - a decline of about 40% from the peak."

That 'advisor' is considered to be a 'star' in the Wall Street universe! After all, he outperformed the average by 15%. That type of "outperformance" will have my friend living on the street in his old age.

Another example of this "Wall Street think" was pointed recently by Tim Iacono of the Greenspan Mess blog. He pointed out ads where the Putnam mutual fund company was boasting about their mutual funds.

Putnam was boasting about how their funds had "outperformed" and moved up in the Lipper rankings of funds for various categories of funds. Yet every one of the funds had negative returns: 1-year returns of -15%, -27%,etc. and 3-year returns of -5%, -13%,etc.

Wow - thanks guys! Instead of paying exorbitant management fees to these mutual fund managers for their "hard work" and suffering a loss, one could have had positive returns by simply putting your money into bank CDs or money market funds.