ziv-ravitz

So long” financial advisors, “goodbye” financial services industry and “help you later” Wall Street. A ‘new-breed’ of DIY investor has been empowered, equipped and enabled to leave all three of them inside their rearview mirror. This ‘new-breed’, which I reference as a DIY 2.0 Investor, is being transformed as a result of the Web 2.0.

The newest paradigm of DIY investors has chosen to harness the potential of this real-time knowledge revolution and its’ instant availability, accessibility, verifiability and deliverability of information to anybody, anywhere, at anytime and to any web capable device. Exactly what a powerful transformative resource that is now at our fingertips providing factual and truthful information and all at no cost. Self-empowerment at its best!

A great place to begin this discussion is by using a quick history lesson.

Investing from the beginning up until the early 90’s changed very little. Being truly a ‘1.0 Investor’ meant your only choice was to invest via an inventory broker that bought and sold individual stocks and or mutual funds in your behalf. In the mid 90’s, the web provided the catalyst for low-cost brokers to leverage the internet’s ability and begin offering on-line trading for those infrastructure indices DIY investors brave enough to defend myself against the challenge. This shifted the control of investing from the stock broker to the DIY investor and these DIY’ers were pioneers as they’d to research, analyze, buy and sell on the own. Obviously, few investors were brave enough to defend myself against this rogue length of action.

By the mid to late 90’s however, the web and it ability to fairly share information, access websites and stream stock quotes, advanced this rogue number of DIY investors into what we now know as ‘the-crazed-day-traders’ ;.With the technology stocks heating, analytical tools coming on-line, investors dumping their stock brokers and advisors to brave the DIY waters, their only thoughts were the riches and wealth that awaited them. This amount of “irrational exuberance” lasted until the Technology or Dot-Com Bubble burst in 2001-2002…and burst it did, costing trillions in investor losses. These early DIY investors that were overcome with “irrational exuberance” whilst the markets were increasing, unfortunately were rationally humbled when the underside fell out. Lesson learned and many of these early DIY’ers returned to the comfort of financial advisors.

In 2006-2008, the ‘Housing Bubble’ formed and it too burst with similar results for investors, trillions in investment losses, again. The investor’s professional financial advisors were supposed to have all the answers and protect their client’s assets. Investors found this is incorrect since the financial firms of Wall Street were busy serving their own interest by selling highly complex and speculative products for their investors. Another tough lesson learned.

DIY investors and professional financial advisors both failed miserably from 1998 – 2008. These historical events and developments caused a metamorphosis for a ‘new-breed’ of investor. This ‘new-breed’ of investor lifted themselves up, licked their wounds and devoted to learn to play a fresh game…a winner’s game…transforming themselves into DIY 2.0 Investors!

This new paradigm evolving from the Web 2.0 is definitely an intoxicating and empowering movement providing knowledge at the speed of thought. The Web 2.0 is allowing each of us to produce informed decisions that we could not have done a decade ago, and it’s all inside our hand.

The DIY 2.0 Investor is embracing this real-time Web 2.0 Revolution to compete, and competing to win. A recent study by Cogent Research of Gen X Investors demonstrated a remarkable change in fortune. This ‘new-breed’ of Gen X DIY 2.0 investors experienced a 28% return in 2010, while their peers who considered a professional financial advisor for guidance, reported only 3%, during once period. Whose game would you rather play?