Best Biblical Investment Advice Ever

While I managed portfolios and retirement accounts, I read voraciously.  The following advice is the Best Biblical Investment Advice I had ever read or heard. 

Wealthy people would realize a greater return if they invested their wealth in what they knew… their business or profession in which they excelled and became wealthy.    

I cannot remember the author, but I do remember dismissing it as absurd at the time.  I thought is was ridiculous advice.  Of course the market is the best place to put money.  That was then. 

This is now.  The fact is, men and women labor and toil a lifetime to become respected experts in their chosen profession or industry.  They hustle to become successful wealthy professionals.  Well known in their local communities.  And then they find their way to the stock market with the illusion their wealth can be multiplied.  Many times over.  They do so only because they expect to get something for nothing.  To succeed with little effort while lacking knowledge and experience.  Where else is this expectation ingrained?  I have yet to find that place.   

The "Something For Nothing Dream" doesn’t exist.  It’s a mirage.  Those professional men and women, fathers and mothers, will soon be separated from their money.  A lifetime of work and reward... gone.  Evaporated.  They don’t see, hidden in the tall grass, the professional investors, traders, finance men, managers, and private client bankers that have labored and toiled a lifetime too.  They too are experts in their chosen profession.  They too have hustled to become successful and wealthy.  They will gladly pocket the businessman's money.  That’s what they do.  It’s unethical for them not to. 

My experience (just one of many) while employed at a bulge-bracket broker:      

I inherited a small investment account of $30,000.  The client was female.  Mid twenties.  In six months, I never saw her and only spoke to her once (via phone) despite my efforts to contact her.   One day, a man comes into the branch asking for me.  His name did not ring any bells.  I greet him.  He follows me to my small cramped office.  I ask what I can do for him.  He proceeds to tell me he is the owner of a regional commercial construction company.  I immediately recognize the name.  He is very successful and well respected for his considerable knowledge and experience (he has my full attention).  I learn he is the father of the small account I inherited (I quietly salivate).  He said he liked how his daughter’s account was managed and didn’t like how his account was managed at another broker.  I learn he wants to transfer $400,000 to me (my heart skips with glee). He didn’t leave until the new account had been set up.   About a week later, thirteen stock positions arrived via ACATS.  That was February 2007.   

Four months and a few investment tweaks later, (37% of account was in BAC) his account was up 6% despite the two day March shellacking.  He stops by, unannounced, walks into my office and drops a cashier’s check for $1,300,000 on my desk and says, “I am selling my company.  This is the balance of my individual 401k.  I don’t want to take on much risk, so ten to twelve percent would be fine.  Thanks Stack.”   

He leaves before I could explain that was simply impossible.  I called him that evening to manage his expectations, to explain 10%-12% percent returns beat the historical market average.  Those returns are not risk free.  He explained how he could get market returns via a passive ETF or mutual fund and that he pays me to do better than he could do.  I attempted to explain the risk again.  He didn’t like what I said, so he moved his money to a guy down the hall.  The following week the $1.7 million was put to work, fully invested in 31 stocks.  That was June 2007.

The following spring, the sale of the company was final.  The next check he dropped off was gargantuan, albeit I heard only half.  The other half was trusted with a financial advisor at a national bank.  The guy down the hall put it to work.  Five months later, he transferred the account, down 44%, to the bank and rumored to have invested in 3% CDs.

He lost millions in five months.  Financial matchstick men will do that.  They find it unethical not to seize the opportunity.  It's their game.  He would have done much better if he invested in what he knew, his professional and social communities.  Maybe if I had recognized the Best Biblical Investment Advice I ever read, his choices may have been different.

Wealthy people would realize a greater return if they invested their wealth in what they knew… their business or profession in which they excelled and became wealthy.