Observation of the Day: Investment advisors are swarming like bees
May 12, 2009
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While I do blog from time to time here, OK a little more than that, I technically do not work in any field related to investing. I actually work in the auto industry (insert joke here). My company has an office in a building that's owned by a major REIT.
A number of the tenants of my building have not surprisingly run into financial difficulty over the past year and have either gone bankrupt or moved out to less expensive space. As this was happening I thought to myself "Man, the company that owns our building is screwed. There's no way that they'll be able to fill all of this empty space."
Boy was I wrong. New companies are occupying this vacant space at a rapid pace. I finally wondered to myself today "Who in the heck are all of these new companies and where are they coming from?" So I did a quick walk around the building and looked at the corporate directory.
It turns out that just about all of them are some how related to advising others on investing their money or managing money directly. While I am not in the city, I am within driving distance of Wall Street. Apparently people who worked on "The Street" are being laid off in droves and they are forming their own companies.
The names of the new companies in my building looks like a dictionary of buzzwords. I kid you not, the following is a real list of the names of some of these companies (I've changed them slightly to protect the innocent):
XYZ Capital Management (there is three of these)
XYZ Trading
XYZ Wealth Planning
XYZ Financial Group
XYZ Capital
XYZ Brokerage Services
XYZ Advisory Services
XYZ Risk Management
XYZ Financial Services
XYZ Securities Corp.
The fact that investment advisors are swarming around me like bees has something to do with the part of the country that I'm in, but good grief. I guess that after beeing...excuse me being...on the street for all these years these guys don't have any other skills, but something's going to have to give. There's not enough money in the world for all of these guys to survive. I wonder how many of them make it...50% at best? That's probably very optimistic.
Anyhow, that's my random observation for the day. The question is what are we going to do with it. One conclusion that I have been able to draw, and I don't like it either, is that real estate in my area likely has much further to fall. It was propped up by all of these Wall Street bonus babies for years and now that pool is drying up (not completely, but it's not like it was).
Another conclusion that one can draw is that the shift in power towards banks and Wall Street over the past decade, and the resulting astronomical salaries there, has sucked America's talented people away from real, useful industries.
Ideally an economy should be based upon producing things that people want to buy...particularly people abroad. The U.S. consumes a lot, but produces very little in terms of real, tangible things. Instead of adding value, for years we have been using leverage and financial smoke and mirrors to create the illusion of productivity, spending some of the money that we made from doing so on massages, fancy coffee, and financial advice domestically while sending the bulk of it abroad for tangible goods. That's part of the reason why we're in the mess that we find ourselves in today.
Don't get me wrong. Investing is very important and there certainly is a place for investment advisors, I actually find investing and economics fascinating and wouldn't mind becoming more involved in the field some day, but the sector seems to be a little overcrowded.
That's my $0.02
Deej
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