Whatever works!

My twitter timeline for the last two days has been inundated with accusal and counter statements between a noted value picker and someone who claims (claim since I do not know him personally) a Financial Planner.  I know neither of them but its interesting to see the reactions of others.

One reaction I keep hearing whenever such dog fights break out is that one should follow any strategy that suits him and should not demean any other just because he believes his strategy is better than the other. Man, am I amused to hear this from guys who laugh at the very concept of Technical Analysis. But first things first – I agree that what I do and use for my trading / investing is based on what I believe is best for my kind of philosophy

The problem starts though when I make tall claims about its ability and worse of all, use those claims to sell stuff to other people. The easiest money that can be made in the markets is by selling tips to gullible investors / traders who hope to cut down the amount of research they need to make on their own and yet be able to take advantage of market opportunities.

When a Ayurveda practitioner claims to be able to treat and worse cure Cancer by usage of his medicine, we laugh at his claims and at best ask for proof that is acceptable to the scientific community. Serious folks will approach courts to ensure that non sense is not peddled to save the gullible from being taken for a ride.

But when it comes to the financial world, we have not many such safeguards. SEBI has only recently started to register those who want to peddle advise, but once done, they are free to do whatever they chose to and this makes the whole effort futile.

For years, PMS returns that were generated by fund managers for their clients were not available to the general public. Thanks to Moneylife, we now have them disclosing the same (at least most of them) and this provides a equal playing field for the investor as to who is good and who is not.

In the field of Advisory, claims are tall by nature. So, we have websites that claim 90 – 95% success ratio. Anyone with any bit of market experience knows this is bunkum, but then again, the target for these sites is the general public who wish to make money without having to invest time and resources.

On one hand, we have evidences (mostly from US) that shows us that the failure rate of any trader is very high and that majority of investors are not even able to beat the market indices and on the other, we have site after site peddling systems / strategies that seem to make the whole statistic look like a pumped up number.

Personally I am sketpic about guys who claim to have understood and digested the markets and yet need to sell you stuff (SMS Tips). The big money lies not in selling tips to clients (and many of them have to be really goaded to try it out) but by helping manage money for clients (either as direct fund managers or as Certified Financial Planner). But then again, that exposes one to risks that never come up while selling what is essentially DIY stuff.

As a wonderful quote goes, “When it comes to Success, There are no short cuts”. If you are looking for a easy way to achieving profits in the market, do remember another quote that comes from the poker world

“Listen, here’s the thing.  If you can’t spot the sucker in your first half hour at the table, then you are the sucker.”  – Rounders, 1998

Don’t be a sucker. It really Sucks 😉

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About Prashanth

Have been a full time participant in the stock markets since 1996. Run a Yahoo Group where focus is exclusively on discussions of the Indian Markets using Technical Analysis as the tool (groups.yahoo.com/group/technical-investor)
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4 Responses to Whatever works!

  1. Nishanth Muralidhar says:

    I have been following the same battle as well and jumping at times with my own comments..I know both of them ( I subscribe to the value picker service and follow the very well written blog articles of the financial planner). My 2 cents – Both of them are right in their approaches. Now , the “65% CAGR for 14 years ” or the “Peter Lynch” nametag , never ever have I seen the valuepicker make these claims. I invest in both direct equities and MFs , and my direct equities consist both of my own picks and the value picker services. Right now , for the past 3 years ,the value picker stocks have been outperforming my own picks and the MF portfolio.But I dont rush off to put all of my money into his picks.Im comfortable having a good portion of money in MFs ,some money in the valuepicker offerings and rest in my own picks.This strategy gives me comfortably the returns I expect from the equity side of my portfolio. To me , there is nothing wrong with either the valuepickers approach or his services , just that the subscriber must be fully aware of what he is getting into. If not , then he has no else to blame for his plight

  2. Jigs says:

    Very rightly put Prashanth, I agree no one can CONSISTENTLY beat Index (market). Also, Market humbles every big ego so no need to make tall claims when going is good.
    I have seen people out-perform for 2-3 years and then market starts new cycle and same guy under-performs for lot many years. So best approach is to continuously learn and improve own style than get in to argument of who is right and who is wrong etc.

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