A Registered Investment Advisor
Our firm was founded on the premise that most investment recommendations that are mass-marketed to individual investors are inappropriate, opportunistic and structured to maximize profits for the company selling them. Here you will find a better way to build wealth over the long term.
The Danger of Mutual Funds
The majority of retail customer investment assets are held in mutual funds despite overlap, high expense & lack of customization. Mutual funds have also provided poor performance over the long term and this fact can be easily obscured. Mutual Fund investment gives the appearance of growth and can lead the investor in the false belief that they are taking part in responsible investment, but every investor in a mutual fund owns the same portfolio, and the danger is that the investment can be inappropriate but appear to the investor as “safe and diversified”.
Actively managed equity mutual funds charge investors an average of 1.4% per year in expenses. This figure does not include any sales loads or transaction fees that may be incurred, and many brokers charge their own management and account fees on top of the management fee for the fund. This can add up very quickly. Some funds have upfront loads of as much as 8.5%, so investors have dug themselves a deep hole even before their investment has had a chance to earn a return. Paying high fees could pay off if the performance of these funds was strong, but statistics show that over the long term about 80% of mutual funds trail the market benchmark index.
It has also been shown that an investor who bought shares in the mutual fund company itself would have made more than an investor who invested in that company’s funds. That should be glaring proof that these companies are rarely putting clients’ interests ahead of their own.
Stock Brokers (now called Financial Advisors)
Finding an advisor who knows you personally can eliminate the problem that mutual fund investors face-lacking a personalized investment strategy. Brokers can customize a portfolio for your specific goals, but wirehouses (brokerage firms) often lack flexibility with what securities the representative can offer. For instance, individual stock picks are considered not highly profitable for larger firms. Unfortunately, of the three mutual fund pitfalls highlighted previously (lack of personalization, high expenses, and poor performance), only the first is solved by going the broker route. Full service brokerage firms charge very high fees, and research shows that their analysts are no better at picking stocks than monkeys throwing darts at the Wall Street Journal stock table. Why pay high fees for their recommendations?
When trust is running thin and conflicts of interest abound, why not just buy the entire stock market? On the surface, index funds appear to be quite an attractive option. It is true that the broad stock market indices have averaged returns of 10-11% per year since the 1800s. However, since no investor invests for that long, we should look at various market cycles that have occurred over time. The “market” refers to the S&P 500 Index except for years prior to its creation, when we will use the Dow Jones Industrial Average.
1929-1954 The market peaked in 1929 and didn’t reach that level again for 25 years
1926-1976 The market returned an average of 3.5% per year for a 50-year period
1982-1999 The market averaged 19% annual returns with only 1 negative year
2000-2009 The market ended the decade of the 2000's lower than where it began
As you can see, index funds can produce awfully disappointing returns unless the stock market is booming. The fact is, if you are tracking the index and paying fees, you are basically consistently underperforming the market. Index funds work when most stocks are rising, but investors relying on such an environment will need to be very lucky in their timing and could very well be disappointed over the course of one or two decades.
How We Are Different
Meixler Investment Management, Ltd. was founded as a better alternative to mutual funds, indexing, and stock brokers. For mutual fund investors and those who use stock brokers, it is a tough task to earn above-average investment returns. The combination of high expenses/commissions and average (at best) investment recommendations, make it nearly impossible to beat the S&P 500 Index.
Since our portfolio management fees are calculated as a percentage of your investment assets, we have incentive to make you money, not to simply buy and sell many times over to generate commissions or to select certain products. We trade to make our clients money, and for no other reason.
What Sets Us Apart