Why You Should Fire Your Stock Broker

This one is a good read and has been circulating the blogosphere for a few days now. The gist of it is that the entire industry that has developed around the secondary securities market is a fraud (i.e. stock brokers, investment advisors, etc). This is because of something called Efficient Market Hypothesis. The theory goes that no one can beat the market average by picking stocks because security prices already fully reflect their potential future value. So no particular stock broker or advisor has any additional insight as to the potential value of a security that is not already incorporated into its current price.

So those shows like Mad Money, where Jim Cramer yells a lot and looks really red while he is telling people how to pick stocks - they are full of shit. In fact, if you actually go back and look at the performance of their stock picks, they fall well below the average performance of the market. They just try to make you think they can pick stocks so that you are convinced they should handle your money. Which they do by moving it around to accumulate transaction fees and commissions.

So the point that I got out of all that is that if I ever have money to invest, park it in a broadly indexed fund for the minimum possible transaction fee and then leave it there.