STOCKS N SHARES

evertony · January 30, 2017

The Cowboy said:
Well that's one way of interpreting it. But my point was that no-one can 100% predict the market, so even the best wealth manager could see the odd investment go awry. But that's still preferable to them placing their own cash on the table. They're not stupid.

But I guarantee they'd make a vastly greater ROI on your money than you ever will on your own.

I'm being pedantic, but how can you "guarantee" that if you don't know me or what I do?

The Cowboy · January 30, 2017

evertony said:
I'm being pedantic, but how can you "guarantee" that if you don't know me or what I do?

Ok, I made an assumption that you don't have a direct access into the global financial markets and products at the rates the wealth management firms do.

evilwebby · January 30, 2017

The Cowboy said:
Well that's one way of interpreting it. But my point was that no-one can 100% predict the market, so even the best wealth manager could see the odd investment go awry. But that's still preferable to them placing their own cash on the table. They're not stupid.

But I guarantee they'd make a vastly greater ROI on your money than you ever will on your own.

Not necessarily.. there is plenty of scope and opportunity for the canny private investor to outperform the big boys, for several reasons;

1. You can buy into small companies without affecting the price. If a big fund wants to buy into a small but promising company then to have any effect on its bottom line it will virtually have to buy most of the outstanding share issue, which in itself could easily push the price up 20-30% or more. As a result most big funds just end up buying stocks in the same Ftse 350 companies..

2. Private investors can choose how much exposure they want at certain times, even selling up and going to cash ifbthey think the market is heading down. By contrasy mutual funds have to be fully invested as per their mandate and investment criteria.

3. Investors can use leverage and other products to hedge, again something that mutual funds are not allowed to.

4. funds are affected by buying and selling of people who are invested in the fund. Therefore if investors get spooked and sell up then the fund has no choice but to then sell its holdings which further drives the fund price down, regardless of its underlying value.