BY DOMENICK RAFTER
Editor in Chief
Since the 2008 financial crisis, it might not be surprising to find out that the common man is, to say the least, a little leery of investing.
We see it every business day, on the nightly newscasts or on our smart phones, the red and green arrows telling us if the three major indices are up or down. We hear the reasons why when we see the red arrows; Greece, China, Janet Yellen, whoever she is, was sent to the hospital.
So it may seem right to say that investing is not for everyone. But that’s not what Ken Weber, a mutual fund expert and registered investment advisor, thinks.
“Investing is for almost everyone,” Weber, author of Dear Investor, What the HELL are You Doing?: Smart and Easy Ways to Fix the Mistakes You Make With Your Money says.
And his book outlines the right way to invest; easy to follow steps on how to avoid the mistake and pitfalls that get many rookie investors.
Weber says most investors make the same mistakes, and those mistakes are a direct result of human conditions, such as fear, greed, lack of patience and lack of discipline.
“[This Book] directly stems from having thousands of conversations with investors across the country,” he said. “Most of the mistakes are common mistakes. Smart investing is not hard.”
In the post-Madoff world, it is expected that many people who aren’t well versed in the world of investing are fearful about giving away their money. He noted that in the Bernie Madoff scandal, there was a number of “red flags” that went missed, but that there are certain easy rules to keep in mind to avoid being scammed.
Among the tips he outlines in his book; never write out a check to an individual broker or registered investment advisor, always write it out to the company.
Another common mistake he outlined is a constant issue, especially with inexperienced investors; selling in a downturn.
“Selling while the market is down is probably the most egregious mistake people make,” Weber said.
The human instinct, he explains, is to get out of the market when things are bad, but for investors who are in for the long term, or even the medium term, selling in a bear market is a terrible idea. First, selling low means your investment has lost value and you’ve probably made a loss, or as Weber puts it, you’re “locking in losses.” But downturns very rarely last a long time. Even after the 2008 financial crisis, during which the major indices drop as much as 50 percent, the losses were reclaimed within a few years and then some.
As a registered investment advisor, Weber is regulated by the SEC, while brokers are not. He has “a fiduciary duty to the client.” That means he is legally bound to make decisions in his client’s interest, even if it doesn’t make him money. That responsibility is a major reason he wrote the book.
“It’s about educating the investor,” he said. “Showing them what to do, and what not to do.”