This discipline will reveal to you the inconvenient truth about Wall Street…

Wednesday: The Independent Investor FROM THE DESK OF MILES EVERSON: Wall Street is an eight-block-long street in the Financial District of Lower Manhattan in New York City. Throughout the years, the term has become a metonym for the financial markets of the United States as a whole, the American financial services industry, New York-based financial interests, and the Financial District itself. However, there’s one inconvenient truth about Wall Street that you, as an independent investor, should know. Curious about what that is? Keep reading to know what this inconvenient truth is and why it’s necessary for you to know this as you invest in the stock market. CEO, MBO Partners Chairman of the Advisory Board, The I Institute

This discipline will reveal to you the inconvenient truth about Wall Street… Hundreds of years ago, Dutch colonists settled into the new world, which was New York City. That time, New York City was called “New Amsterdam,” named after the Dutch colonists’ homeland. After settling in the place, these colonists built a wall in the lower area of Manhattan to provide border and protection. Two versions of the name of the wall appeared on maps, the Waal Straat and Wal Straat. Some historical accounts suggest that the term, “Wall Street” was simply named after the wall built by the Dutch. However, the De Waal Straat and other historical maps suggest that the name came from a family of Dutch settlers called Walloon families or Waal families. Years later, the place was called “Wall Street” in English and became a center for trading and finance. Eventually, a lot of the world’s largest banks and financial firms picked locations on and around Wall Street. Now, most financial services and investment banks have left the actual Wall Street location. Despite that, the term remains as a metonym for anything business or finance-related in the US. How Wall Street Makes Money Wall Street banks and brokerages today are not actual investment managers. In fact, for the most part, many investing giants did not work on Wall Street. If they did, it was only for a short period of time. The main client for Wall Street firms is not the individual investor. Truth be told, these firms were built to help big companies with their banking needs. In other words, the bigger the client company, the bigger the fees Wall Street firms generate. Wall Street is also known as “The Sell-Side” because of the financial services it sells to big corporations. On the other hand, the individual investors of companies or those that buy the stocks of companies are known as “The Buy-Side.” “When you buy stock, technically you’re on the buy-side. All of the investing giants, all of the greatest minds in investing, made their money by being on the ‘buy-side.’” Now, here’s where the problem lies. In the financial media, 99% of what we hear comes from the opinions of sell-side analysts. Very rarely do we hear opinions from the buy-side. This is because usually, buy-side investors aren’t in the business of sharing their investment ideas with others. Here are some of what the greatest investors in the world have to say about sell-side analysts giving out their buy-side opinions: “Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.” - Warren Buffett “We don’t hire people from Wall Street. We hire people who have done good science.” - Jin Simons “After you work on Wall Street it’s a choice. Would you rather work at McDonald’s or on the sell-side? I would choose McDonald’s over the sell-side” - David Tepper See? These people are aware of the lack thereof of sell-side analysts and their buy-sell-hold opinions. You should take the advice of these giants too if you want to generate more money by investing in stocks! Every day in the financial news, we hear about changing buy/sell opinions and target prices of the sell-side analysts of the large investment banks. Actually, they are quite vocal! The thing is, these stock opinions are worthless for the most part. That’s why you have to be wary about everything you see, hear, or know about Wall Street. Next week, we’ll be continuing on in this topic and further discuss why you should ignore 99% of Wall Street’s advice and headlines. Hope you’ve found this week’s insights interesting and helpful. Follow us on LinkedIn.     Stay tuned for next Wednesday’s The Independent Investor! Learn more about why The Wall Street is a vast promotion machine and why you should be wary and careful enough to not easily believe everything they say about the market, finance, or investing on next week’s The Independent Investor!