My mother had a good sum of money with a full service broker. He made money for her over a long period. I had bad experiences with full-service brokers in the past, but was willing to give my mom’s old broker a chance when she passed away.
So I placed about $60,000 with him. Another $60,000 I placed in a Fidelity account and did my own stock selection.
It has been about 9 months since I started, in a down market. The results? Both accounts have lost money, but my self-managed discount brokerage account is up about $6000 over the account a full commission broker manages. I bought mostly dividend paying value stocks on limit order. Examples are SBLK and ZIM. My broker bought some large-cap dividend payers like CSX, but also high-flying growth stocks like Amazon and Tesla.
I plan to keep up the competition for at least a year, to give him the benefit of an up market. My take so far is that this broker underperforms in a down market. We will see about up markets.
What does your broker charge for their services ? Are they a fiduciary? Investing in TSLA seems odd for your Mom’s money as it’s a speculative growth stock.
I’ve been referred by friends to investment brokers from time to time. On two occasions in the past I’ve asked the brokers to give me a suggested $500K portfolio of the investments they recommended for me based on my situation. I asked them to come back in 6 and in 12 months and we’d compare the results based on that portfolio with the two Vanguard mutual funds that I held for the largest part of my paper investments. I promised them I’d buy their suggested investment portfolio if it beat my two mutual funds.
Both came back for the six-month comparison and both blew off the 12-month check up. STAR and Wellington beat both professionally hand-picked portfolios hands down.
Unfortunately I heard yesterday that Vanguard is right behind Blackrock in pushing ESG shareholder initiatives in the companies whose stock it buys. For that reason, I will not buy either company’s funds, and suggest other investors avoid these villainous companies as well.
Update- I am now up $11,000 over my full service broker in the contest, which means my picks are 11% ahead of his. I am going to let this contest run into the next market upturn, since some guys do better in bull markets.
