Message to Investors: Don’t Ignore Losses in Your Investment Accounts

According to a recent article on InvestmentNews.com, a study commissioned by Charles Schwab revealed that a significant percentage of investors are unaware of the losses sustained in their accounts. To make matters worse, more than one-third of the investors surveyed did not know which mutual funds they owned and less than one-third spoke with their financial advisor or stockbroker on a regular basis.

In the article, a Charles Schwab executive was quoted as stating that “some investors tend to be overwhelmed or intimidated by investing.” This is interesting because it confirms the important role that stockbrokers and financial advisors play in investors’ financial decisions. While this seems elementary, it astonishes me as to how many broker-dealers take the position in arbitration cases that the stockbroker or financial adviser played a passive role in the losses sustained in the investor’s accounts.

The survey also reported that 60% of the investors surveyed do not plan to make any changes to their investment allocations following the stock market’s rapid post-September descent. Stockbrokers and financial advisers often tell their clients to “stay the course.” In addition (or alternatively), many advisers and stockbrokers will show their clients charts or other documents that show how following a decline in the stock market a large portion of the recovery often occurs on select days — thus reinforcing their recommendation to stay the course, otherwise taking the risk that the investor will miss those few opportunities to participate in the recovery. Following this recommendation, clients feel forced to hold the same investments that created their losses.

It is important not to ignore losses in your investment accounts for many reasons, including but not limited to the following:

1. It is more difficult to recover from a significant loss than it is to sustain the loss in the first place. For example, if you start with $100,000 in an investment account and you sustain losses of 50%, the value of your account would be $50,000. Therefore, you would need a gain of 100% of this reduced amount ($50,000) in order to recover from the 50% loss you sustained.

2. If you are sustaining losses that cause you to lose sleep (or suffer other emotional distress), your investment accounts are probably invested in an unsuitable manner. This is something that you need to discuss with your stockbroker or financial adviser. If your adviser is unwilling to make significant changes to the accounts, or worse yet, if the stockbroker tries to reassure you that the investments are appropriate, you should seek a second opinion. In addition, you may want to consult with a securities attorney to discuss whether you have a legal claim.

3. If you decide to file a claim related to your losses, any failure to act could reduce or diminish your ability to succeed in arbitration or litigation. Whenever legal action is initiated, there are several issues related to the timing of the investor’s actions and the claim itself that must be considered (including statutes of limiations, equitable defenses, and arbitration eligibility rules).

When a stockbroker or financial adviser makes a recommendation to his or her client, they (and the firms they represent) may be liable for losses resulting from the recommendation. The Kueser Law Firm represents investors in securities arbitration. If you are concerned that your investments have been mismanaged, contact us to learn more about your rights.

Technorati : , , , ,
Del.icio.us : , , , ,
Zooomr : , , , ,

Share

Maintained by The Kueser Law Firm

The Kueser Law Firm | Securities Arbitration Attorney | Securities Arbitration Lawyer | Missouri Securities Arbitration Lawyer | Kansas Securities Arbitration Attorney

Social Media – Follow The Kueser Law Firm

DISCLAIMER

The choice of an attorney is an important one and should not be based solely upon advertisements such as this website. Past results afford no guarantee of future results. Every case is different and must be judged on its own merits.

*Any information submitted via this website may not be secure and/or confidential. Merely contacting this firm does not establish an attorney-client relationship.

Contact The Kueser Law Firm

Mailing Address:
P.O. Box 612
Lee's Summit, Missouri 64063
Phone: 816.374.5865
E-mail: Click Here
CONTACT FORM
Your Name (required)

Your Email (required)

Phone Number (optional)

Subject

Your Message:

To eliminate spam, please type the following code in the line below and press the Send button:
captcha

RSS News – Securities Fraud

RSS SEC – Press Releases

  • Two ICO Issuers Settle SEC Registration Charges, Agree to Register Tokens as Securities
    The Securities and Exchange Commission today announced settled charges against two companies that sold digital tokens in initial coin offerings (ICOs).  These are the Commission’s first cases imposing civil penalties solely for ICO securities offering registration violations.  Both companies have agreed to return funds to harmed investors, register the tokens as securities, file periodic reports […]
  • SEC Charges Giga Entertainment Media, Former Officers and Directors With Fraud in Pay-For-Download Campaign
    The Securities and Exchange Commission today charged Giga Entertainment Media Inc. and five of its former officers and directors—Gary Nerlinger, Jarret Streiner, Lawrence Silver, Alfred Colucci, and Charles Noska—with fraud in connection with a scheme to mislead investors.  According to the SEC’s complaint, between February and August 2016, the company bought at least 559,662 downloads from […]
  • SEC Brings Additional Charges in New York Boiler Room Scheme Targeting Seniors
    The Securities and Exchange Commission today brought additional charges against a Long Island, New York-based boiler room previously sued for defrauding elderly and unsophisticated investors. The latest charges allege that First Choice Healthcare Solutions Inc. CEO Christian Romandetti, the boiler room, and four others, manipulated the company’s shares generating more than $3.3 million of illegal profits […]
  • SEC Settles Insider Trading Claims Against Former Chairman and CEO of Advanced Medical Optics
    The Securities and Exchange Commission today announced that it has agreed to resolve its insider trading claims against James V. Mazzo, the former Chairman and Chief Executive Officer of Advanced Medical Optics, Inc. (AMO) for allegedly tipping information about his company's acquisition to his close personal friend, former professional baseball player Douglas V. DeCinces. The […]
  • SEC Announces Agenda, Panelists for Staff Roundtable on the Proxy Process
    The Securities and Exchange Commission today announced the agenda and panelists for the staff roundtable on the proxy process on November 15, 2018.   The roundtable, announced in September, will begin at 9:30 a.m. in the auditorium at the SEC headquarters at 100 F Street, N.E., Washington, D.C. and will be open to the public. The […]