Professional money managers can be worth the enormous fees you pay them, but in my opinion that’s the exception not the rule.

One local guy I know who places money for his clients was telling me about a money manager who recently admitted screwing up on AMBAC - he doubled down on his losing position when the stock was at $50 a share, on it’s way to sub- $5 per share.

This money manager actually sounds like he was bragging that he’s only really been fooled three times:

1. The infamous “whoops” bonds of the early 1980’s (Washington Public Power, WPPSS or “whoops”)
2. Enron
3. AMBAC

I’ve made many a mistake personally, but I wouldn’t brag about those three. In fact, Whoops bonds are a cornerstone of Investing 101 in my book, and it goes like this:

Many brokers will try to sell you a AAA rated bond and tell you that your money is safe because no AAA bond has EVER defaulted. And they are telling the truth, no AAA bond ever has defaulted

That’s because it’s always DOWNGRADED first!

Washington Public Power was downgraded, and went bust. Bondholders got nothing.

But the real key lies beneath the details. Examine the personal portfolio of the broker you are working with and see if any of the toxic waste he is trying to dump on you is in his personal portfolio (he won’t let you look). Chances are it is not.

At one point in my life I assisted with tax returns for many high net worth individuals, and I also spent time as a stockbroker. From those two experiences I can tell you that many brokers don’t even invest - sometimes because they blow all of their money instead - and others have a very feeble portfolio of a few miscellaneous “flyers” they picked up and are probably under water.

Seek wise advice from multiple sources. In these trying times financially, I recommend (and use):

1. Casey Research
2. the TREND letter