Believe it or not, I often get questions from the local
simians regarding the best on-line broker to use.
The start of the discussion usually goes
something like
, "I'm thinking about
opening an on-line trading account because I want to self-direct my
IRA...". Being an opportunist,
I immediate ask them if they are associated with a Congressman, or know anyone
in Washington, or the SEC, Goldman Sachs, CEO of any large corporation; or have
any history of developing algorithms, know any "quants", have any
unusual math skills, or understand the inner workings of high frequency
trading, or have any inside information whatsoever.
The answer is always
no, because if it was yes, they probably wouldn't be asking me anything in the
first place.
Once my rapid-fire
interrogation is complete, I tell them that they
should probably keep their money where it is.
I don't ask where it is, and I don't care.
I just hope the conversation will change to
quadrocopters and that will be the end of it.
If the inquisitive simian is persistent and doesn't think my curt
response is an insult to their intelligence, I follow up with,
"Most monkeys lose money this
way."...and then I segue into the possible range and speed of a
radio-controlled
quadrocopter.
Just because I've whip-sawed my way to profit using and
abusing leveraged ETF's over the last four years, and occasionally make remarks
about Facebook, Netflix, or my 2003/early 2004 "relationship" with
ONCY, or my "right place at the right time" position with ZOOM in late
2003, or my sitting on cash during the latter part of 2008, or mention my
seemingly clueless buying into several mutual funds post-Black Monday in 1987,
doesn't make me an expert, nor does it give my advice on gambling in the stock
casino any more credibility than anyone else's.
Admittedly, my stories and logic behind every good
trade have gone on and on ad nauseam.
Since when does a monkey have any self-awareness? Also, notice how I didn't mention the bad
trades here. Typical for traders (monkey or human) to "accentuate the positive".
Having no luck with avoiding the inevitable, I then have no
choice but to whip out a chart similar to the one below.
This one, created by
"Gumby" from Bogleheads.org, shows the historical performance of
the Harry Brown inspired Permanent Portfolio
which can be duplicated by dividing your capital into four
equal chunks: stocks, long-term U.S. Treasury bonds, cash, and precious metals
(gold).
This can be accomplished in multiple ways such as using
the wide variety of ETF's available.
The need to research different brokerage firms becomes less
important because once your self-directed "fund" is set up, you only
need to adjust it once per year or use a 15/35 rule. If any part of the
portfolio has dropped to less than 15% or grown to over 35% of the total, then
you reset all four segments to 25%.
Of course, a little
gambling money can be put aside (to lose) if necessary. And there you have it. A simple solution to self-directing your own
account, unless you actually can predict the future, or
answer "yes" to any of the question listed in the first paragraph.
I guess I could bring up Harry Browne's Permanent Portfolio
right away instead of trying to ignore the question, but then we may never get
to discuss quadrocopters.
__________________________
Believe it or not, I often get questions from the local
simians regarding the best on-line broker to use. The start of the discussion usually goes
something like, "I'm thinking about
opening an on-line trading account because I want to self-direct my
IRA...". Being an opportunist,
I immediate ask them if they are associated with a Congressman, or know anyone
in Washington, or the SEC, Goldman Sachs, CEO of any large corporation; or have
any history of developing algorithms, know any "quants", have any
unusual math skills, or understand the inner workings of high frequency
trading, or have any inside information whatsoever. 
