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Don’t ever listen to the super-rich…

Written by Ian Anderson - COO | 22-May-2020 10:05:28

A couple of years ago I read a fascinating article that quoted the CEO of JP Morgan, Jamie Dimon,  saying he despised investing in government bonds, and when it came to crypto currency, ”the only way out of Bitcoin is another shmuck”.

For Mr Dimon the stock market is where ‘your’ money should be. Being that he’s a super successful guy worth northwards of $1.3 billion, and one of the most successful bankers in the world, that seems like a pretty convincing reason to lob all ones savings into the stock market.

However, when you are paid a $20 million salary and your bonus alone is more than what 99.998% of Americans earn, the inherent risks of the stock market will have zero impact on Mr Dimon’s ability to retire extremely comfortably.

Take another wealthy individual on this side of the pond, Lord Turner, former boss of Financial Services Authority (now replaced by the FCA) who is sitting on about £56 million - he must know what he is doing on investments?

Four years ago Turner said “the losses which will emerge from peer-to-peer lending over the next 10 years will make bankers look like lending geniuses” – I’m still not sure to this day who should be more insulted by that statement, the P2P platforms or the bankers?

It certainly made a lot of investors question whether they should be in the sector, yet ten months later Lord Turner reversed his standpoint, jumped over the fence in support of P2P, and said, direct lending would “grow and play a useful role in the credit supply system”.

So, when Warren Buffet gives his sermon that building a cash stockpile is key, or Soros is telling everyone he’s increasing his position on every FTSE100 company, simply ignore them all - your position is unique and ‘your’ funds are finite.

Make sure you set out your financial goals, get suitable advice when needed, diversify and build a balanced portfolio where the risk is acceptable. And when you do decide to look for higher returns, in stock markets, p2p, etc., make sure you understand the risk part of the equation for those promised higher returns.