Unresolved Quandaries (Part 1)

On May 8, 2016, I met up with my friend CJ and got to talking about other trading-related activities I would like to be doing. I took notes and due to its continued relevance, I am now formalizing this as a complete blog post.

I told CJ that I had considered giving educational presentations in addition to managing money for others. I discussed what I might offer compared to other investment advisers (IA).

CJ felt that most IAs are glorified salespeople. “All they do is sell other people’s funds,” she said right up front. Her husband used to work for a hedge fund and she seemed to be more informed than most on the topic.

CJ next supported the idea that I might bring something different to the table. I come from a trading—not sales—background. This might give me an edge over most advisers who have little to no option trading experience [much less know how options actually work]. I blogged about this previously and concluded it may not actually be the case but she agreed emphatically even before I could offer any caveat. At the very least, her support affirms it to be a decent marketing claim.

I next discussed how I support self-directed investing because much advertised in the industry is not as it appears to be (discussed in my last post). Again, CJ quickly agreed. “Advisers are salespeople and they know nothing. My husband knows more than our adviser and has had to tell him from time to time to make certain changes in the account. They just care about selling their company’s funds.”

If only I could always be addressing an audience with buy-in before even saying a word!

“It’s more than just selling funds. I also think it’s a failure to offer options as part of the trading strategy.” Because long stock is speculative, I view most stocks and funds as having added risk.

CJ now fell off the bandwagon as she came face-to-face with a perceived complexity about derivatives themselves. “Teaching people about options would be very difficult. That could take a long time to understand and is probably something the average person wouldn’t have any interest in learning.”

I lost her further when I tried to explain how the average person might trade options on a casual basis. CJ described how tired she is when she comes home from her part-time job (full-time would be even worse); checking up on her investments is the last thing she would want to do.

“You could probably check the market just once per day,” I said.

“How many people are able to do anything every day? On some days I’m lucky if I can even remember to brush my teeth!”

I will continue next time.