The beauty of "free" advice from "experts"......

If you have read my pervious posts, then you would have read the two lessons about not listening to what people say, but look at what they do.

If you have not read these lessons, the links appear at the bottom of the page.

A slight variation to this is "don't listen to what they say, look at what is actually happening".

Here are some real and current examples of this lesson in practice....

For the last 11 months of 2022, the stock market has been in decline. It has been a bear market to say the least. However, there have been some periodic bear market rallies, but the overall trend has been down.

The "free advice" touted by "experts" has been:

• Buy the dips

• Bear market is near it's end

• Inflation has neared its peak and interest rate increases will start to pull back.

• Recommended "cheap" stocks to buy that have potential to soar in the future

• Recommended "discounted" markets to be in.

• Housing values set to boom in 2023.

• etc

However, what has actually been happening, is that the retail investors are listening to the media BS, and buying stocks, while the institutions are actually selling their shares and cashing up! The institutional experts are telling retail investors to "buy" while they are selling their shares!

Why? because they need people to sell their shares to. If they told the truth, what they actually believe - which is that the market is falling and will continue to do so, then everybody would be wanting to sell and there would be nobody buying the institutional shares being dumped on the market.

Simple, when you can read between the lines!

The US Federal reserve stated back in 2021 that the inflation that was starting was going to be transient. It was not a long-term thing. The same message was being touted in Australia.

Inflation is not transient, it has been increasing steadily. It is now "officially" 7.3% in Australia. The only way to curb inflation is to tighten the money supply and increase interest rates - which is what is happening.

Interest rates will peak around 4% and the RBA target Cash Rate is 2.85%

In reality, if the interest rate is cheaper than the inflation rate, it will do nothing to curb inflation. One can still borrow at interest rates less than 5.5% and buy assets that are appreciating at (currently) 7.3%. That means that you have a net positive cash flow! This will fuel further inflation, not curb it! Basically, it's "free money".

The ONLY way to curb inflation, is to have interest rates at or above the inflation rate - that is what happened to us in the early 1990's, when inflation was rampant. 17.5% mortgage interest rates were normal.

Those that think interest rates are high now, may be in for a surprise in 2023.

However, nobody seems to be talking about this at the moment.

Yet, the governments keep increasing interest rates in most Western countries.

Questions for you......

• How does a casino or a bookmaker make their money?

• How does a stock broker and financial advisor make money?

• How do realestate sales people and property developers make money?

• Do they make money only when you make a profit, or do they make money when you are also losing money?

The truth is, brokers make money when you buy and sell (trade) any stocks.

Financial advisors charge a fee (around 1%) of funds that you have given them to manage. Realestate agents make money whenever you buy and sell (trade) property, and developers make money when you buy property.

I'm pretty sure now you know how a casino and bookmaker make their money!

So, all the above rely on you to "stay in the game".

They do not care if you win, lose or draw. As long as you "stay in the game", then they continue to make money. Make sense, right?!

So, understanding the above, ask yourself the following.....

1. What incentive does a realestate sales person, or property developer have, to tell you that the market is crashing and that this is not a good time to buy or sell?

2. What incentive does a stock broker or finacial advisor have to tell you to cash-up your stocks and wait until the market settles or gets to near bottom before you buy back in?

The answer to both 1. and 2. is that there is NO incentive for them to tell you.

Their aim is to keep you in the game so they can make money. Do you understand this?

That means that YOU must be financially literate, and be aware of what is happening with your money and investments.

You need to be aware of the broader economy and market forces.

Listening to the free "advice" that these people offer, and expecting it to be good advice is insane! They have a conflict of interest.

YOU need to filter, evaluate and scrutinise all the information and advice. Be ruthless about it. Then you must decide if any of the "advice" has any validity and is worth considering.

It's your money, your future, and your call as to whether you will be a victim or a victor.

If you really want advice and guideance regarding investing, or business, or any other matter, you MUST seek it from unbiased sources. Sources that have no conflict of interest.

Sources that have experience in such matters - many years of experience.

When it comes to stocks, I do my own research, as well as subscribe to a few newsletters from people that do not manage money, and hence have no conflict of interest. They make their money on providing as acurate as possible information and data.

When it comes to realestate, I make my own decisions based on my own research.

There are many places to get free advice. I find however, that the free advice is the most expensive.

As far as "experts" are concerned..... Honestly, how many "experts" were able to perdict the following major scenarios?.......

1. The dotcom bubble in 2000?

2. The financial crisis in 2008?

3. The world shutting down due to COVID 19 ?

4. Russia invading the Ukraine?

5. Rampant inflation and interest rates of 20% back in the 1990's?

6. Current inflation rates?

7. Stock market collapse and just as fast recovery in 2020?

8. Stock market crash in 2022?

9. The collapse of FTX in Q4 2022 (crypto company).

10. Etc, etc

You see, so-called experts are not that much better than you and I in their predictions.

In fact, with regard #9, "experts" were touting the allegedly fraudulent CEO and founder of FTX as some sort of crypto currency guru as much as a couple of months before the collapse!. With celebrity endorsements, media hype and experts raving on about the young FTX CEO, greed ruled and many gullible investors piled into the scam. Those investors lost billions of dollars, with many peole losing substantial amounts of their personal savings. Remember the earlier lesson..... "If you don't understand it, or cannot control it, leave it alone!"? Well, here is a classic case of people piling into something the know nothing about, with zero control over their money once it was invested in FTX, and it went horribly wrong for these people.

The previous lesson where I suggest that "The masses struggle financially. If you want to be financially secure, then don't follow the herd..." also applies in this case.

If these people had NOT followed the masses, then they would have been OK. However, the greedy and ignorant masses piled into FTX.

Further more, because those masses piled in, others that saw what the masses were doing, also followed because they did not want to miss out.

The masses were doomed!

Ignorance has it's costs.

The experts are now saying that interest rate hikes will start to slow down and peak by end of Q1 2022. Now, since experts have been so wrong in the past, I will assume they are wrong yet again and rates will continue to rise throughout 2023. The only thing that will change my prediction is if we have a massive recession and the governments decide to stimulate the economy again by dropping rates (again). If this happens, then the pain will be just postponed another year or two and then it will hit harder and faster than ever before.

I guess, time will tell.

People forget past pain very quickly, and hence, history is doomed to repeat itself as always.

Lessons:

• Do your own due dilligence and make your own decisions.

• Experts get it wrong a lot of the time.

• Experts are not much better than you and I in their predictions.

• Watch for conficts of interest when accepting "free advice"

• Seek out unbiased advisors that are paid on the performance and accuracy of their advice.