While nobody likes losing money in the stock market, recent sharp market
declines may reveal unsuitable investments in your portfolio, giving you
an opportunity to assess the investment strategy implemented by your broker,
according to investment fraud attorney David P. Meyer.
“Stock market returns have been high for the last few years. In that
kind of environment, many stockbrokers feel pressured to seek higher returns
for their customers to try beat the market average,” said Meyer.
“But to do that, they need to take on more risk and oftentimes that
risk is inappropriate for their customers.”
According to Meyer, “In rising markets, the underlying riskiness
of your investments may be concealed as ‘rising tide lifts all boats.’
But when markets correct, and they always do, you may find that your portfolio
is losing money at an even faster pace than what should she appropriate
for you given your investment objectives. If that’s happening to
you, it may be because your portfolio is concentrated in higher-risk investments
and you don’t even know it.”
Meyer says that a good strategy for avoiding unsuitable investments is
to be realistic about long-term market returns and to have an appropriate
allocation of stocks, bonds, and cash that makes sense based on your age,
objectives, and risk tolerance.
Meyer says you also need to keep your financial advisor accountable.
“Many investors don’t realize it, but brokers are required
under the law to recommend only suitable investments to their customers,”
he said. “If your broker fails to do that and if you suffer losses
as a result, then you can pursue legal claims against the brokerage firm
to get your money back.”
The investment fraud lawyers at the law firm of Meyer Wilson have been
representing investors throughout the U.S. since 1999. They have recovered
over $350 million on behalf of their clients.
Contact us today for a free case evaluation.