3 Secrets that you do not tell Wall Street

Jeremiah
Bowman from Motley Fool is about the most
secret things that hides from us
Wall Street. Maybe it is difficult –
compete with Wall Street, but full
articles on how not to start a
cynically invest.

Earlier this
the famous journalist Maykl Lyuis
said that the high-frequency traders
regular “beat” of investors in the auction,
essentially making it a matter of milliseconds.

banks
Wall Street has been fined many times for
cheating customers, and many accused of
the financial crisis is the big
banks, which play against the customer,
but there are three things that Wall Street no
He would not tell you about investing.

1. "Keep"
often means "sell"

Citigroup Bank
recently it was fined $ 15m
for labeling certain actions as a
“Hold”, but a separate group
customers told us that you have to buy them.
Analysts have found at least six
shares, which then opened a short
position wealthy clients of Citibank.

securities
SEC analysts often
we have to repeat that their recommendations
the shares of their own and are only
personal conviction. This creates sometimes
problem banks, but their task – to find
buyers and sellers at a certain
share price. In addition, you must
please important clients with access
to a variety of information that just
It creates this disparity.

part of the problem
It lies in the fact that large banks do not
want to offend the same company that
They are their regular customers. AND
therefore “hold” does not always mean
to sell, but we must be careful and
pay attention to whether the bank did
any underwriting companies –
if so, it may mean it
sell recommendation.

2. “A lot of
what we say – the only noise “

how
disguised sense recommendations
"Keep", Wall Street also loves
expressed in the jargon of other concepts,
which make investment more difficult,
than it should be. Much of this
“Esoteric” terminology refers
to technical analysis. Simply put,
not all words made on Wall Street,
be taken literally. Sometimes
analysts deliberately confuse participants
his mysterious assumptions.

Besides,
concepts such as diversification and
often appear in the speeches of experts and
not confirmed by a closer
consideration. Distribution tactics
investment through the various classes
assets proved to be necessary to reduce
risk, but this is lost revenue.
Uorren Baffet, for example, rejects this
strategy, and invests much of
money in Berkshire Hathaway shares of financial
companies and manufacturers of consumer
goods.

3. Half
of us (and you) should do everything wrong

In each
transaction there is a winner and a loser.
While some of the circumstances
can make the deal profitable for one
hand, it would be disadvantageous to the other.
The shares will be either ahead of or lag behind
from the market. This is the nature of the markets,
After all – they adapt to
perception. If every investor believes
it’s time to buy the stock and wait until the price
reaches an equilibrium point, in any
the event will begin debate on its future
direction.

Adoption
investment strategy “buy and
Hold “via index funds and
dividend reinvestment – one of
the best ways to ensure the long-term
accumulation of wealth. Buffett even the
He asked that his successors left
90% of the cash in an inexpensive S P
500. He explained: "I believe that the long-term
investment – is the result of trust and
such an approach will outperform those
which uses the majority of investors
– whether pension funds, institutions
or individuals. constant attention
to a position in the market and expenses for managers
and analysts can be huge, and
for investors as a result will not bring
no benefit. to ignore
chatter, keep the minimum cost
and to invest in stocks as if you would
We were on the farm and could not always
Watch news". I can not with him
agree.

Author – Jeremy Bowman, an adapted translation – MrTwins.

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