Feeding the Monster

I want to continue the conversation from last time due to all the chatter going on :)  A lot of us are pretty hands off on our investments.  A lot of companies have 401k programs that give you varying degrees of control over where your money goes on a month to month basis.  I know my company offers a self managed 401k and also a company managed investment trust.  Some people like my older sister have pensions with varying degrees of control (jealous!).

So I think a questions is how actively you want to manage your investments.  I think the answer to that is personal for each person.  I actively manage my stocks and make my own trades, but I really don't know for sure whether I could have done better by just putting it in one mutual fund and forgotten about it.  For now, I choose to believe that I'm doing better by making my own trades. I should note that about a third of my savings does go into my company trust, where I have absolutely zero control where it's invested.

So getting to the point, I'm not making a pitch that you change your investment ways.  It may very well work for you, and in the end you'll probably beat a lot of hedge funds out there. There is a point that I want to make; however, that ties back to my blog entry about "the Con".  Just be aware that by allowing the Wall Street machine to manage your money, you are to some extent feeding the monster.  They will take big money management fees, and, this is the most egregious part, they are making billions of dollars trading circles around this massive chunk of unmanaged money.  All of that unmanaged money makes the markets more predictable, and stable, for them to make bigger, more frequent, and more dangerous trades.  I'm sure you've probably heard of some of the quite alarming stories in the last couple years about the "flash crash", JP Morgan's "London Whale" trade (lost over 6 billion in one investment), and the countless hedge funds that have blown up.  We (the little people) are collectively like a big chunk of whale meat floating in the shark tank.  I find all of this pretty disgusting and that fuels me to not trust the machine, and my dream, beat their asses at their own game!

So.... let's see if I can get any responses.  It would be cool to get a response from say, a family member. :)  So the question is... where is your comfort level with managing your investments??