Bad advice?

A financial advisor of one of the bigger banks in Belgium gave the advice to a customer in 2017 to sell his 1750 Netflix stock. Because Morningstar gave a warning that the price could drop from 200 USD to 80 dollars, and a quarter of the man’s portfolio was in Netflix stock.

But a little more context is needed, the customer in question had bought the stock in 2005 for 2.7 $ each!
The man already had an incredible return on his investment. So he did what the advisor said and sold at 205 dollars a piece. But that was clearly not enough for him. When Netflix climbed further to 600 and even 800 USD in 2021, he decided to go to court and claim a settlement for his losses from the bank of the advisor…

Incredible verdict

And, you read it already, the court ruled in favour of the man. The bank needs to pay the man 30000 USD as a settlement for the losses because of the “bad” advice he was given. An incredible verdict, because it was impossible to predict that Netflix would rise further, and it’s never possible to predict future stock prices.

Both the bank and the customer have appealed. The man finds his settlement to low, the bank claims, correctly, that an advice is not binding and the customer acts for himself!

Quite sure that the court will rule differently in appeal, but in Belgium you never know…

Sincerely,

Pele23

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