If a website, app, bank RM, or IFA tells you that you cannot manage your own money the way MF can, remind him/her/it that there have been many cases of …..well read on.

At the end of the day, it is a guy like you and me who is buying/ selling for a big fund also. It takes sometime for small individuals to accept that the big fund houses ALSO make mistakes. Similar to mistakes like what you and me make.

I also do think that if a small investor is making investing mistakes – he is being advised by an IFA who himself should be blamed for abettment to suicide! Most people quote a Dalbar report – while forgetting who paid for the Dalbar report! Go and do some research. The research was pre-ordained to say that I think. Today no investor is acting in isolation – 90% of retail money is still held through a distributor -or bank! It is the sheer arrogance of the advising community to think that the ‘small investor’ is doing exactly the opposite of what the ‘smart’ money is doing. When I meet some fund managers, I am convinced that if I could meet the perennially wrong small investor and be his counter trade. That should make me a billionaire soon I presume!

Either investors are really behaving badly and their advisers aren’t stopping them (or are not able to stop them?) , or advisers are giving bad advice and investors are following it. Researchers using “mystery shoppers” masquerading as prospective clients have found that some financial advisers tend to tell the customers what the customers want to hear. They are just throwing more fuel into the existing panic. Most IFA lack the conviction in portfolio managers/ fund managers, and consider themselves as part fund managers and this hurts the investor and the adviser!

Interviews with fund managers around the world gives so much evidence of poor behavior by them. Most of them are biased, play home favorites, go by friend’s choices, are part of similar Whatsapp groups, it is not funny. One Pension fund manager has admitted that they have chosen the hottest fund manager – based on a quarterly performance! Clearly many a times the so called Smart Money is Dumb too.

How can we be allowed to forget that it was professional fund managers who sunk their client’s money in Bernie Madoff cheating funds. What was the pressure tactics that Bernie used we do not know, but these guys “analysed” and justified the investment, did they not?

Did we not recently see an amc bail out the IPO of their brokerage arm? the issue should have been scrapped, but they did get away, and I feel I am the ONLY sole voice taking a dig at them. The financial reporting industry has accepted this as another mishap. One such move by an asset manager once in a decade is enough to create the feeling that XXXXX if a s…d up fund manager. Worse than mistake of course is fraud.

Some advisers surely tell the clients that any expectation in equity beyond PPF*1.2 is a sheer stroke of good karma, there are advisers who not too long ago were peddling 18% cagr based on past performance. There is one IFA who still says that principally withdrawing from an index fund will work if you keep the withdrawal at 0.75% per month and not at 12% like bank RMs do. Markowitz is wasted on them of course. Clearly these guys have an audience which eats out of their hand, but these guys are the typical chauffeur knowledge guys who masquerade as advisers. Such advisers should spend far more time on financial planning and not try to become closet fund managers.

Many a times I am unable to distinguish between Smart Money and Dumb Money. In fact Criminal money – where the fund manager knows what he is doing is wrong hurts me more. Oops they do exist, do they not?

 

 

 

 

 

 

 

 

 

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  1. As Nasleem Taleb says it is randomness (plain luck) that make them smart or dumb. The real performance guys who proved themselves won’t beat the chest saying he is reading out a gospel in media.

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