Lessons from the Wolf


By the time the 10th person asked me if I had seen The Wolf of Wall Street, I knew I had to go. I’m guessing that I kept getting asked because I work in financial services, and people automatically assume there is some kind of connection between professional wealth management and Wall Street stockbrokers. So off I went.

Say what you will about the flick about former stockbroker Jordan Belfort.  The negative buzz is that it has no moral compass, it glorifies drugs and prostitution, and it shows no compassion for the victims. But just as Scorsese leaves us to it to take in the experience and decide on our own what to feel, ‘Wolf’ had a few lessons after all.

Stock Picking Doesn’t Work

Nobody knows if a stock is going up, down, sideways, or in circles. You know what a Fugazi is? It’s a fake ~ Mark Hanna.

This would be the first big lesson from the head broker to the wolf-in-training. Most stockbrokers know that picking stocks and forecasting their short-term movements is a loser’s game. But since a stockbroker’s compensation comes in the form of a commission when there is an activity (buy, sell), he has an incentive to trade.  Higher costs have a direct negative impact on a portfolio’s returns, and it’s one of the few areas of investing that can absolutely be controlled. If you own mutual funds that are classified as A , B, or C shares, you may be paying unnecessary fees and/or commissions.

Greed is Bad

The year I turned 26, I made 49 million dollars, which really pissed me off because it was three shy of a million a week  ~ Jordan Belfort.

While my OCD side can identify with the desire to have such a nice sounding weekly income figure, I think it’s safe to say that money didn’t buy happiness for Jordan. Last month, right when people were taking in the great returns of 2013 and the talk of another good year ahead, I noticed a spike in incoming client phone calls. I was hoping they were calling to share a life event or to make sure we were rebalancing their accounts (selling the best performing assets to buy whatever didn’t fare well in 2013). They weren’t. They were wondering if it was a good time to sell some bonds and buy more stocks.  How quickly we forget that stock prices reflect all known information and that our sentiments about the markets are rarely a good barometer of what’s coming next.

Education is Good

While some of Jordan’s victims may too have been driven by greed, I will assume that most of them were merely uneducated about investing.  Still, most of us devote more time trying to save hundreds of dollars on a vacation then we devote to investment education that might save us thousands of dollars or more. One of my heroes, Wall Street veteran Gordon Murray (rest in peace good man), wrote what is perhaps the simplest, shortest, and most direct book about investing – The Investment Answer. Read it even if you already have a trusted financial advisor. You’ll ask better questions at your next portfolio review meeting.

So did I like the movie? Since I’m a fee-only financial planner and don’t condone the actions I witnessed in the film, I plead the 5th.

Happy investing,


The opinions expressed are those of the author and are subject to change without notice in reaction to shifting market conditions. This blog is provided for informational purposes, and it is not to be construed as an offer, solicitation, recommendation or endorsement of any particular security, products, or services.