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The Baltimore Broker

April 28, 2023

The Baltimore Broker

The advice provided on this document is General Advice Only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. If any products are detailed on this document, you should obtain a Product Disclosure Statement relating to the products and consider its contents before making any decisions.


Good afternoon,

There was once a Baltimore stock broker who was a cunning and deceitful man. He derived a strategy of attracting new investment to his investment firm by carefully manipulating would be investors minds. 


In his local neighbourhood he initially wrote out to 1,024 households regarding his advice on one stock. To half of the households he told them that the stock was going to fall dramatically in price and to the other half he wrote stating that the stock price would rise. A month later the stock had risen substantially and the broker decided to write another letter. This time it was about another stock. However, those who received the first letter stating the first stock would go down, never heard from the Baltimore broker again. It was the other 512 households he was interested in where he had made the original correct decision.


Again, he wrote to half of the remaining households about a new stock which would fall in value and to the other half about the same stock stating it would grow in value. A month later the stock had grown in value and once again those households who received the wrong advice never heard from the Baltimore broker again. This left 256 households who had received two correct stock tips in a row.


The same strategy was repeated the next month and 128 households had now received three correct stock tips. The month after, 64 households received four correct stock tips. This strategy continued for 10 months by which time there was only one household left who had astonishingly received 10 correct stock tips. The Baltimore broker found it his duty to knock on this households door to introduce himself as the master behind these 10 correct stock tips and of course to ask the household to invest their life savings with him.


This strategy is still being used today. Just type in “share tips” in Google. There you will find an array of companies acting like the Baltimore broker. Each writing a story one day of how a company will go up in value and then writing a story a day later about how the same company’s share price will fall. Lo and behold, a month later they write a story about how clever they are in foreseeing the companies rise or decline and for a subscription fee of only $59.95 per month you too can receive more stock tips.


Don’t be a fool and subscribe to these companies. 


Let me know if you wish to discuss this topic further.


-Shaun Liddicoat

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2020 Federal Budget

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The 2020 federal budget was delivered on Tuesday 6th October. There were no major impacts identified to members financial strategies other than anticipated tax cuts and other stimulus measures .

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Investment markets have been extremely volatile over the past 3 months with the Australian Share Market falling approximately 33% , followed by a 22% recovery. It is important during this time that you continue to be rational and appreciate that the share market is there to serve you and not to instruct you . Imagine if a random stranger came knocking on your door, asking you to sell your home to them at a far reduced price. The rational reaction is to remain calm and tell the stranger to get off your doorstep. Yet many people don’t act this way and sell perfectly good assets at reduced prices . The stock market is the only thing that I can think of where people sell at a discount and buy at a premium and it is simply a device which transfers wealth from the impatient to the patient . In the background we have a clear understanding of what your assets are worth and will only recommend you sell these assets at a premium or if you need the money. We will also be recommending you continue to acquire assets at low prices. There are no secrets in investment markets and success is based more on qualities of temperament than qualities of intelligence. I would expect a lot of volatility in the months to come as the world grapples with employment issues , a coronavirus vaccine , government stimulus and debt issues . It is important to understand that these issues will eventually become distant memories and should not influence your long term goals and aspirations. Want to talk more about your investment goals? Contact us

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Prefer to read? Here is the full transcript below: As previously communicated to members, over the past six months, Cloud Financial Planning has been busy working with Avalon Financial Services and ASIC, in obtaining our own Australian Financial Services Licence . Things are progressing well with the application, and we are hopeful of having an outcome later in the year. This will act as a key protection mechanism for ourselves and you the member. We remain conservatively minded on investment portfolios at this stage and continue to use a rational approach to investing. The US has never printed so much money before and has never spent it so quickly either. Some economists argue that government debt is no longer an issue in society. I would say if you believe that, then you must also believe in the tooth fairy. No one knows how much more of this easy money can be printed. With the US being over $22 trillion in debt and with a cashflow deficit of over $1 trillion per annum, the US finds itself in a precarious position with many young people worried about their future….. and rightly so. Much of this debt has found its way onto share market, which is inflating share prices and creating a large divide between the rich and poor. Generally speaking, there is a large disconnect between share prices and what companies are earning. This has created a heightened level of risk, especially if interest rates were to increase. However, I expect this policy of excessive US government debt to continue if Donald Trump wins the next election or if Mick Bloomberg is elected President. On the contrary, in the unlikely event of Elizabeth Warren or Joe Biden becoming the next US President, then I can foresee a change in direction and with that would bring increased taxation on the super wealthy and a major US share market correction. While there are still some shares which trade at fair valuations, these are becoming harder and harder to find. It is inevitable that share prices will once again realign themselves with company earnings. It is not until the tide goes out that you realise who’s swimming naked and so I am encouraging members to be selective with their investment choices. I wish you well and please be in contact should you wish to discuss anything further.
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