Comment by adaisadais | Hacker News Reader

Comment by adaisadais | Hacker News Reader

I spoke to my financial advisor a month ago and he told me he was not worried of a major and sustained drop as FED and Congressional intervention had helped curtail that before it spiraled out of hand.

But I cannot help but see current market prices and see current for lease and boarded up building. I wonder if he was correct. I wonder if the advice he has given me is wrong?

I believe we are about 9months away from the greatest financial disaster of our times. We should be and should have looked at COVID-19 as a war and not as a pandemic and we as a nation should have encouraged others to do the same (as they have). We should have legally declared war on the virus, shut down the economy for three months, passed a massive stimulus, and gone back to business when the “war” was over.

Unfortunately we have weak politicians at every level and extremely divisive leadership at the top. The good news is that we are just as informed and can find truth like never before. The hard part is that the truth is hard to find especially when we have something as large as the stock market lie to us on a day to day basis.

The advice your financial advisor gave you is no more insightful than the stuff you read in editorials and website forums.

Financial advisors exist for the people that are predisposed to appealing to authority, and also have no time for that trade.

They are nowhere near as specialized as like an oncologist who you would still want a second opinion from. Most programmers have the cognitive abilities to pass a financial advisor's licensing exam with one week of preparation.

Just for perspective.

Advisors are about behavioral control. The last thing you want to do is have your advisor trading up a storm in your portfolio. They are not incentivized to trade because they have to justify it. You're not incentivized to have them trade because passive management beats out active almost all the time.

I think what most people don't realize is that the pandemic is more of the pin that is popping the bubble. Remember the Fed was dropping rates all last year like a lead balloon and injecting liquidity in massive way last fall -- all before the virus.

If Covid-19 goes away overnight, I don't see the economy recovering and I think the Fed's actions have been catastrophic for the US dollar. They're literally hitching the country's solvency to the market to save it. Maybe it will work, sure, but were a bit in uncharted territory so I don't see where the confidence is coming from. And by doing this they have to be right; they're making it their hill to die on. If they're wrong, America will become a very different place.

Do not underestimate the distorting effects of the government. When we read about trillions of dollars we find it very hard to comprehend what that means in terms of actual market impact and price discovery. Right now I would not bet against the markets in the next year. If we cannot find a resolution to coronavirus by early 2021, I would start getting worried about market contagion.

That's amazing. Shortly after the Powell interview, in a speech a wall street insider insisted the whole reason for 60 minutes interview is so that financial advisors can have a leg to stand on in case they get sued for buying stocks into a severe recession with earnings dropping. They just needed the CYA.

>I believe we are about 9months away from the greatest financial disaster of our times

Why 9 months? What would precipitate that?

By nine months it will be a debt crisis which has become a liquidity crisis which then forces a fire-sale of assets.

But most of the debt has been around for years at this point. What in the next 9 months changes that?

Debt is fine if payments can be made. What's coming is an inability to make payments.

Further, credit is tightening, so that, say, companies that have been using credit to stay alive (zombie companies) won't be able to anymore. Up until around 2003, zombie companies were no more than 2 or 3% of total companies, as you would expect. This grew to 5-6% in the 2008 crisis. But that crisis wasn't allowed to resolve naturally, so it's been continuing to grow, and now it's almost at 20% -- of all companies.* https://www.axios.com/zombie-companies-us-e2c8be18-6786-484e...

The economic contraction that we're just starting is going to set off a wave of defaults, and those defaults will beget more defaults.

Why won't the fed just pump another $8T into the economy to prop up the assets further?

It could... But each dollar they add puts the country's solvency at risk. And it's already deeply at risk.

But you're not alone thinking this. I'm deeply concerned at how many people think that the Fed can just "manage" this. I feel like I'm watching generational wealth falter and the spoiled children are reacting to the news with, "My dad will just put it on his card."

I don’t think any country that can print it’s own currency CAN become insolvent, by definition. Our currency could be completely devalued yes, and nobody would put their money in USD anymore, or back loans made in the US, and the resulting economic crash would reshape the world economy towards Europe and China. But not be insolvent.

my first (only) financial advisor was a manager at RadioShack for 10 years before he got the advisor job.

relatedly, i once applied as a network admin at Ed Jones. They didn't have their shit together when i showed up for the interview, and gave me the questions for the financial advisor interview instead. it was an automatic process, about 100 questions that were some variant of "how good or bad do you feel about asking your friends to buy financial products you don't understand well, and will you also please ask them to recommend you to their friends?"

i didn't get the job. and i fired the advisor.

Financial advisors study for months and are legally required to pass tests before giving financial advice. It’s not like one day you’re at radio shack and the next you’re a cfa/cfp.

Series 7, series 63, cfp, cfa, etc. when you get a job at fidelity you literally just go to class and study 8 hours a day for a few months.

Also you were asked sales rep questions, not actual advisor questions.

Financial advisor =/= certified financial planner (CFP or CFA).

It's like how there are people at HR Block who will do your tax returns, and know a lot about the process -- but they're not a CPA, which has a formal requirement.

Similar to paramedics vs. doctors/surgeons, etc.

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