The Investment Scientist

Can Morgan Stanley Financial Advisors Beat the Market?

Posted on: February 16, 2012

Morgan Stanley Smith Barney

Recently, a number of people came to me for advice with one thing in common: they all had a financial advisor from Morgan Stanley Smith Barney. These advisors all promised them that they could beat the market because Morgan Stanley, as a major institution in Wall Street, has extraordinary investment research resources.

I am just amazed how the financial industry (not just Morgan Stanley) uses the same trick to seduce people. Unfortunately, people fall for it over and over without fail.

If Morgan Stanley’s research is so good that it can beat the market, why can’t the company use some of that research to help its own stock price. I did a comparison of Morgan Stanley’s stock (MS) and the S&P 500 and found the following:

Morgan Stanley S&P 500
1 Year -31.96% 2.6%
5 Years -70.78% -7.15%
10 Years -54.02% 19.83%

In the last 10 years alone, Morgan Stanley lagged the market by a whopping 73%!

Next time those big Wall Street financial advisors tell you they can beat the market, before you rush to believe them, do a sanity check, like I just did.

Get my white paper: The Informed Investor: 5 Key Concepts for Financial Success.

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Author

Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC. He is also a regular contributor to Morningstar Advisor and Physicians Practice. To explore a long-term wealth advisory relationship, schedule a discovery meeting (phone call) with him.



You may also get his monthly newsletter, or join his Facebook page for regular wealth management insights. Michael's email is info[at]mzcap.com.

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