I went to an investment advisor firm party for rich people

[Ponderling]

Advisors do offer discipline.

DIY... save 1% but 1% is not that much

Yes, some need someone to hold their hand and set up auto contribution transactions, annual rebalancing, etc.

But the part about 1% being not that much is not true.
It is 1% every year.
Over time this 'little' amount adds up.

I bailed on my advisor about 17 years ago.

I built a spreadsheet back then and came to the realisation that if I maxed my RRSP contribitions every year until I retired on an already pretty healthy sized RRSP account, that all my new money was going to pay his management fee.

That realisation made going DIY easy.

Sitting tight when stock markets slide or when bond holdings dump, like in 21 and 22 is not fun.
But it comes with the territory when you put on the big boy pants with no pull ups on underneath.

 

[anonemouse]

1% counts , as you point out , that gets compounded and the compounding gets compounded then that gets
coumpounded and so on, but lots of people feel the responsibility to DIY is too great and for 1% they can relax but
we know the truth. They do not and will not believe us as they have been brainwashed and the education system failed them

Also, for that 1% they get the discpline of a professional who encourages monthly savings

View attachment 424171


and will not panic

View attachment 424173

So it is more psychological than anything else therefore that 1% is well
spent for some investors but not because advisors are so smart that they can beat the market,
they cannot in spite of their bravado


Happy investing

Buffet has a massive cash position at the moment, way ahead of the recent tariff volatility. I expect he's going to get back into the market in a big way with that cash pile, and as soon as he does I'll follow suit.

 

[Mandala]

Buffet has a massive cash position at the moment, way ahead of the recent tariff volatility. I expect he's going to get back into the market in a big way with that cash pile, and as soon as he does I'll follow suit.

Interesting idea

How will you know where and when Buffet moves ?

Watch BRK acquisitions?

But, on deeper reflection , knowing what stocks he buys is of no value as he clearly states the
average investor (like us) should buy an index

If you want to buy what Buffet buys then buy his stock but stay away from buying individual stocks
as you are not Buffet

BRK.B is his stock which is a stock made up of other stocks, is it not?

 

[Jami77]

I once went into Scotia. I was just investing RRSPs - they had this big poster on the wall of all their various funds. She was selling me pretty hard. I had to do this whole questionaiire n my level of experience and risk. They also had a basic index tracker with like 1% fee. I asked her if any of the managed funds she was selling me on beat the index tracker. She looked down kinda sheepishly and said No. I bought the tracker.

 

[Zoot Allures]

I once went into Scotia. I was just investing RRSPs - they had this big poster on the wall of all their various funds. She was selling me pretty hard. I had to do this whole questionaiire n my level of experience and risk. They also had a basic index tracker with like 1% fee. I asked her if any of the managed funds she was selling me on beat the index tracker. She looked down kinda sheepishly and said No. I bought the tracker.

You seem to be saying you bought an index fund from Nova Scotia for 1%

A ETF does the same for like .1 %

 

[Dave in Phoenix]

I would never invest in an ETF (no market maker is required in a down market to add participation units if bids are low, so it's very risky). That is why in some crashes some ETFs went to $0.01 which is the no bid place holder.

Nor a toss your dart at an index fund just because its in an index with no evaluation of the financial outlook, risk etc, of individual companies. Yes, over the long-term, most all 10-20 year periods, the average return is 9%-10%. But with experienced fundamental analysis and not just in large-cap, mostly tech, there is potential to do better and have protection in down markets. The S&P500 in the US is a market value-weighted, so the Mag 7 predominates. They surged then now plunged at are tied to AI, which may take years to be significant to profits at a huge capital cost for the computing power. Then Deepseek - a tiny China start up- did it better at far less cost with lower-cost chips.

A 1% "fee only" advisor equals a 9.1% front-end load on a mutual fund over 10 years if the price does not go up. Worse if have gained since the 1% is on increasing values. This would be illegal to charge vs the typical 2-4% load on a well-researched fund with long-term Alpha vs Beta for an experienced team of analysts and managers for which you pay maybe 1.2% of an expense ratio since they are well paid, with pay often based on performance.

The key to me is Alpha vs Beta. Over or underperformance for the risk taken. With a diversified portfolio with active management by research teams doing extensive fundamental research on companies, meeting management etc.

Technical analysis is worthless in my view since it is based on past and not present economic outlooks and specific company outlooks.

Mutual funds in Canada have a much higher expense ratio than in the US partly since they have expensive registration fees in each province vs in the US only with the SEC and states basically just follow easily

 

[Zoot Allures]

I would never invest in an ETF (no market maker is required in a down market to add participation units if bids are low, so it's very risky). That is why in some crashes some ETFs went to $0.01 which is the no bid place holder.

Are you saying if no one sells to a low bidder in a crash ETF goes to 1 cent ?

Never heard of that, can you give me an example? but still its underlying holdings have not evaporated

r a toss your dart at an index fund just because its in an index with no evaluation of the financial outlook, risk etc, of individual companies. Yes, over the long-term, most all 10-20 year periods, the average return is 9%-10%. But with experienced fundamental analysis and not just in large-cap, mostly tech, there is potential to do better and have protection in down markets. The S&P500 in the US is a market value-weighted, so the Mag 7 predominates. They surged then now plunged at are tied to AI, which may take years to be significant to profits at a huge capital cost for the computing power. Then Deepseek - a tiny China start up- did it better at far less cost with lower-cost chips.

I disagree. I think it has been established if an active fund beats market it is by chance

A 1% "fee only" advisor equals a 9.1% front-end load on a mutual fund over 10 years if the price does not go up. Worse if have gained since the 1% is on increasing values.

I think he meant 1% on an index fund but anyways yes I see your point

This would be illegal to charge vs the typical 2-4% load on a well-researched fund with long-term Alpha vs Beta for an experienced team of analysts and managers for which you pay maybe 1.2% of an expense ratio since they are well paid, with pay often based on performance.

Not sure I understand you but if you pay 2-4% load on a well-researched fund with long-term Alpha and the price decined after 10 years then how much is that load?

I believe a active managed mutual fund can beat the market only by chance that means past performance is not indicative of future performance.

I do not care if a fund has beat market ten years in a row , that is still by chance. Think about it, There a thousands of funds out there so some of them will consistently beat market by mere chance so past performance is not indicative of future performance and that 3% MER means that fund has to beat market by 3% just to break even

 

[Soccersweeper]

I clicked on this thread thinking it would be a story about the after party with paid for women. That's a management fee I could get behind

 

[Dave in Phoenix]

Are you saying if no one sells to a low bidder in a crash ETF goes to 1 cent ?
Never heard of that, can you give me an example? but still its underlying holdings have not evaporated

An ETF does not own any stocks only participation units

More than you may want to know but more why ETFs are risky investments in a market crash:

Back in the 2015 crash, one of the many flash crashes we had about 10 years or so ago, I was watching the CNBC's market shows.

All of a sudden, all the speakers were in shock when they saw ETFs trading at $0.01 and thought this must be an error. It was simply because no authorized participant was willing to buy the ETF from sellers at any cost as the market was plunging. The $0.01 on the quote feeds was simply a holding value indicating no bid.

The risk was largely with stop loss orders, which allow you to sell at the next tick, so they sold at $0.01. That is why stop orders should be limit orders.

I believe this was the first time in history that the SEC - As I recall, a few days later - Reversed the trades to what was considered a fair value. Many ATF holders had losses far in excess of the last value of the stocks, but the SEC only reversed the extreme cases.

ETFs are risky investments:
Many consider ETFs a gimmick to sell higher-risk, mostly index investing, appropriate for the day trader, not a long-term investor. This makes huge profits for Wall Street.

You are not investing in companies; you are buying creation units. These units are appropriate for high-risk frequent traders who understand the complexities and risks of ETFs.

“If individual investors can't resist the temptation to jump into the fray and trade themselves silly, then they will just be making Wall Street richer, as well as justifying John Bogle's famous claim that ‘An ETF is like handing an arsonist a match.’" Source: Investmentnews

In regular times, the price of an ETF is based on the arbitrage opportunity between the ETF price and the price of the underlying securities. When things get squirrelly, authorized participants will allow the price of the ETF to drift to a point where they think they can still make money. They will then step in to be that buyer of last resort only when they are sure that the basket of securities they’ll receive doing a redemption can be unloaded for a profit.

You have to calculate a “bid fair value” and an “a fair value” for every one of the underlying holdings, then compare that with the bid and ask of the ETF. In fact, that’s exactly what stock market makers do while they’re trying to figure out when to leap in and arbitrage out any price discrepancies.

The 2015 flash crash wasn’t unprecedented. According to the SEC, another flash crash in 2010 dropped some ETF prices as much as 60% in a span of just 20 minutes. For a few horrific seconds, shares of the iShares Russell 1000 Growth Index ETF traded for a penny, while the Vanguard Total Stock Market ETF sold for 13 cents.

What happened? In short, market makers walked away at the worst possible time.

Can it happen again— Yes.

"ETF pricing depends on the ability of large investors to arbitrage the difference between the value of an ETF’s underlying shares and its market price. When the two prices diverge too far, institutional investors can buy or sell creation units – blocks of stock in proportion to an ETF’s holdings – and profit from the price difference between the two." - InvestmentNews

In many places, you’ll just take the last spread the day—at the close—and average that out of some number of days. The problem is that closing spreads are just plain dumb. Most investors should never be trading at the close at 4 pm due to the mechanics of getting end-of-day quotes in the last 15 minutes. See below

Free brokerage accounts are not "free." For example, Robinhood makes millions on free accounts with spreads and on dealer order flow payments. Revenue was $420m in the first quarter of 2021 but still had a $1.4b loss. In 2020 it had a profit of $7 million on "free" accounts. (I wrote a white paper that included this years ago and have not updated more recent data - but you get the point).

This is the market mess you get into at market close auctions on the NYSE, I believe it is similar for the TSX and other major exchanges.

MOC= Market on close orders
LOC = Limit on close orders
CO= Closing offset orders

3:50 pm
Cutoff time for MOC/LOC order entry. Systemic publication of MOC/LOC Regulatory Imbalance is released. Thereafter only offsetting MOC/LOC and CO orders are allowed.

3:50 pm - 3:59:55 pm
Informational Imbalance publication is disseminated every 1 second. Includes the Paired-off quantity, Order Imbalance, Closing Only Interest Price, and Indicative Clearing Price.

3:55 pm d-Quotes and pegged e-quotes to be included in the indicative Clearing Price dissemination.

3:50 pm - 3:58 pm Only MOC/LOC orders that are documented errors may be canceled.

3:58 pm No cancels after this point, except as provided by Rule 123C(8)(a)(ii).

I have written a lot more about the complexities of ETFs

I have omitted most references but they include various reports

Dave Nadig ETF.com Analyst Blog wrote a great deal including:

"As much as I love collecting charts of terrible trades, it really does break my heart to see folks clearly losing money because of simple mistakes.

"My email box is sometimes full of proof that investors get burned by not paying attention to the basics. And if I had to categorize the big mistakes, I’d put them into four buckets:

He lists the buckets as: The Accidental Stop, The Dumb Market Order, Walking into Barn-Door Spreads and Trading on The Wrong Side of the flow, with details of each.

He concludes:
"So what is the consequence of all this trading? Well, on one hand it is certainly good for Wall Street because it means about $9 billion in revenue from making markets based on the bid/ask spread, which is the difference between what a market maker will buy and sell an ETF for. This is in addition to the $6 billion in estimated annual revenue that ETF issuers make based on the expense ratio. [This was from many years ago, I assume the profits are much higher today with so many more folks using ETFs]

"But is it good for Main Street? It depends. If retail investors can fend off the temptation to trade, then all that increased activity is — perhaps rather ironically — a good thing for them, because it brings down the round-trip cost by tightening up the bid/ask spread."

 

[Dave in Phoenix]

I disagree. I think it has been established if an active fund beats market it is by chance

I disagree with your disagreement Many funds beat their comparable index or benchmark by a wide margin. They are not average funds, which I agree is not much of a benefit on average. But not all funds are average.

Not sure I understand you but if you pay 2-4% load on a well-researched fund with long-term Alpha and the price decined after 10 years then how much is that load?

The 2-4% is a one-time spread, Just like you always pay a spread on stocks, but higher since you are paying professionals, not tossing a dart at a "dumb index." Markets move up or down that much in a day or week so it is minor to pay an investment professional and a professional team with a proven track record. Funds do have to be monitored since changed management or other factors can make it prudent to sometimes change, often within the same family at no cost. Or for another one day or week change in price but changes are only for good reasons and rare.

I believe a active managed mutual fund can beat the market only by chance that means past performance is not indicative of future performance.

I think its by success proven managment and their analyst team not by chance. I have never seen a fund with a 3% MER (I assume that is expense ratio) in the US, highest is often 1.5% but often lower.

Of course, past performance does not assure future results, but I will take a long-term top-performing funds (relative to its category) any day over a toss-your-dart "dumb" index fund with no evaluation of any underlying stocks for their potential.

 

[Zoot Allures]

An ETF does not own any stocks only participation units

Thx, I did not know that.

Participation units keeps the ETF’s share price closely aligned with the value of the assets held in the portfolio,
while the institutional investors profits from temporary deviations between the ETF
share price and the share prices of the underlying shares through arbitrage.

Arbitrage is the simultaneous purchase and sale of the same or similar asset in different markets in order to profit from tiny differences in the asset’s listed price. It exploits short-lived variations in the price of identical or similar financial instruments in different markets or in different forms.

These tiny differences are of no concern to someone who buys and holds

More than you may want to know but more why ETFs are risky investments in a market crash:

Back in the 2015 crash, one of the many flash crashes we had about 10 years or so ago, I was watching the CNBC's market shows.

All of a sudden, all the speakers were in shock when they saw ETFs trading at $0.01 and thought this must be an error. It was simply because no authorized participant was willing to buy the ETF from sellers at any cost as the market was plunging. The $0.01 on the quote feeds was simply a holding value indicating no bid.

The risk was largely with stop loss orders, which allow you to sell at the next tick, so they sold at $0.01. That is why stop orders should be limit orders.

Thx, I did not know that, I never use stop loss orders because what you are doing with stop loss
is market timing which cannot be done with success

I believe this was the first time in history that the SEC - As I recall, a few days later - Reversed the trades to what was considered a fair value. Many ATF holders had losses far in excess of the last value of the stocks, but the SEC only reversed the extreme cases.

ETFs are risky investments:
Many consider ETFs a gimmick to sell higher-risk, mostly index investing, appropriate for the day trader, not a long-term investor. This makes huge profits for Wall Street.

You are not investing in companies; you are buying creation units. These units are appropriate for high-risk frequent traders who understand the complexities and risks of ETFs.

“If individual investors can't resist the temptation to jump into the fray and trade themselves silly, then they will just be making Wall Street richer, as well as justifying John Bogle's famous claim that ‘An ETF is like handing an arsonist a match.’" Source: Investmentnews

Jack Bogle: An ETF is Like Handing an Arsonist a Match

In regular times, the price of an ETF is based on the arbitrage opportunity between the ETF price and the price of the underlying securities. When things get squirrelly, authorized participants will allow the price of the ETF to drift to a point where they think they can still make money. They will then step in to be that buyer of last resort only when they are sure that the basket of securities they’ll receive doing a redemption can be unloaded for a profit.

You have to calculate a “bid fair value” and an “a fair value” for every one of the underlying holdings, then compare that with the bid and ask of the ETF. In fact, that’s exactly what stock market makers do while they’re trying to figure out when to leap in and arbitrage out any price discrepancies.

The 2015 flash crash wasn’t unprecedented. According to the SEC, another flash crash in 2010 dropped some ETF prices as much as 60% in a span of just 20 minutes. For a few horrific seconds, shares of the iShares Russell 1000 Growth Index ETF traded for a penny, while the Vanguard Total Stock Market ETF sold for 13 cents.

What happened? In short, market makers walked away at the worst possible time.

Can it happen again— Yes.

"ETF pricing depends on the ability of large investors to arbitrage the difference between the value of an ETF’s underlying shares and its market price. When the two prices diverge too far, institutional investors can buy or sell creation units – blocks of stock in proportion to an ETF’s holdings – and profit from the price difference between the two." - InvestmentNews

In many places, you’ll just take the last spread the day—at the close—and average that out of some number of days. The problem is that closing spreads are just plain dumb. Most investors should never be trading at the close at 4 pm due to the mechanics of getting end-of-day quotes in the last 15 minutes. See below

Free brokerage accounts are not "free." For example, Robinhood makes millions on free accounts with spreads and on dealer order flow payments. Revenue was $420m in the first quarter of 2021 but still had a $1.4b loss. In 2020 it had a profit of $7 million on "free" accounts. (I wrote a white paper that included this years ago and have not updated more recent data - but you get the point).

This is the market mess you get into at market close auctions on the NYSE, I believe it is similar for the TSX and other major exchanges.

MOC= Market on close orders
LOC = Limit on close orders
CO= Closing offset orders

3:50 pm
Cutoff time for MOC/LOC order entry. Systemic publication of MOC/LOC Regulatory Imbalance is released. Thereafter only offsetting MOC/LOC and CO orders are allowed.

3:50 pm - 3:59:55 pm
Informational Imbalance publication is disseminated every 1 second. Includes the Paired-off quantity, Order Imbalance, Closing Only Interest Price, and Indicative Clearing Price.

3:55 pm d-Quotes and pegged e-quotes to be included in the indicative Clearing Price dissemination.

3:50 pm - 3:58 pm Only MOC/LOC orders that are documented errors may be canceled.

3:58 pm No cancels after this point, except as provided by Rule 123C(8)(a)(ii).

I have written a lot more about the complexities of ETFs

I have omitted most references but they include various reports

Dave Nadig ETF.com Analyst Blog wrote a great deal including:

"As much as I love collecting charts of terrible trades, it really does break my heart to see folks clearly losing money because of simple mistakes.

"My email box is sometimes full of proof that investors get burned by not paying attention to the basics. And if I had to categorize the big mistakes, I’d put them into four buckets:

He lists the buckets as: The Accidental Stop, The Dumb Market Order, Walking into Barn-Door Spreads and Trading on The Wrong Side of the flow, with details of each.

He concludes:
"So what is the consequence of all this trading? Well, on one hand it is certainly good for Wall Street because it means about $9 billion in revenue from making markets based on the bid/ask spread, which is the difference between what a market maker will buy and sell an ETF for. This is in addition to the $6 billion in estimated annual revenue that ETF issuers make based on the expense ratio. [This was from many years ago, I assume the profits are much higher today with so many more folks using ETFs]

"But is it good for Main Street? It depends. If retail investors can fend off the temptation to trade, then all that increased activity is — perhaps rather ironically — a good thing for them, because it brings down the round-trip cost by tightening up the bid/ask spread."

The bottom line of dangers in ETFs is

1 do not use stop loss order on ETF

2 Do not consistently buy and sell ETFs which I do not. The cost of each trade is $10

They say the benefit of an ETF is easy trading where you can only sell or buy an
index fund at the end of the day , I disagree as waiting until the end of the day to sell or buy
is a moot point as you have no idea what will happen in a few hours


We disagree on actively traded vs passive funds. When you find a fund that has beaten the market
for many years that is by mere chance There are so many funds out there some will beat the index by chance.
It is the law of probabilities

Tell me which actively managed funds you believe are market beaters
and I will take a look so we can discuss this extremely important investment strategy

 

[newguy20]

You need a million before they accept you as a client

As I walked in there was a big sign that said 'Welcome Mandala' then as I turned to walk out of such a display
meant to influence my decision I was collared and lead back in so I stayed and this is my report

There are roughly two ways they invest

Buying individual stocks
or
invest money in index funds or mutual funds and they charge 1% and everything, like taxes and MER of funds, you pay for

After their sales pitch, I talked to the clients as I ate the firms food, which was pretty good as they have a full kitchen
with a chief for such events. The clients I talked to did not know how their money was invested and
what their return is or what the risk was yet they all said the firm was excellent. WTF????????????

Some rich people do not deserve to be rich


You can buy the index funds on your own for a few basis points or pay the firm 1% of a million . I refuse to buy mutual funds
with their absurd MER of 2.5% and I refuse to let any firm invest my money into individual stocks as any evidence
the firm pulls out to confirm their stock picking wisdom can be so easily twisted it would have no value other than
issuing a huge red flag if they promise huge returns because they use hedging
IE extremely risky nonsense like currency betting going short etc. that I can
now participate in because I am one of the elite

$1M is not "rich" or "elite" anymore. If it is, everyone who owns a house is rich.
It is simply the target audience for financial planners who work at Investors Group, Edward Jones, etc. With a 1% fee, they only need 20 clients to make a decent living.

 

[Dave in Phoenix]

Tell me which actively managed funds you believe are market beaters
and I will take a look so we can discuss this extremely important investment strategy

Unfortunately, I can not.

I have been in the business for 40+ years, coming from a CPA firm background. I founded a small B/D many decades ago, with about 100 reps in six states.

However, I can not be specific about any particular fund or security, and I can not advise anyone outside the US. I can not advise Canadians since you are not yet part of the US.

I am participating in this forum only as a knowledgeable investor, sharing only my personal broad thoughts and general comments. I am not giving specific advice or seeking any business relationship.

I could not be specific unless I know you meet suitability criteria, such as your risk tolerance, objectives, holding period, income, net worth, tax bracket, etc. All suggestions must be in your individual "Best Interest." All recommendations must be documented with compliance. All emails are archived, and I can not use SMS messages unless via a specified server that is monitored and archived.

We can only use approved forums for business. I have a website and am on LinkedIn, Facebook and X, but all postings have to be preapproved by compliance and archived. I am about to post two compliance-approved April updates, but I can't give you links.

That is why you won't see many posts here by us in the business, at least on anything other than general information in our personal view, since Canada has similar rules, I assume.

 

[Dave in Phoenix]

$1M is not "rich" or "elite" anymore. If it is, everyone who owns a house is rich.
It is simply the target audience for financial planners who work at Investors Group, Edward Jones, etc. With a 1% fee, they only need 20 clients to make a decent living.

At least in the US, you must exclude personal residence equity from net worth for suitability.

The costs of being in business are about $10k incurred for each new year, for example, for licensing, fees, required E&O insurance etc. These are just annual fees only to be legally in the business for most in the US. There are lots of other costs based on activity and income (sharing with B/D or RIA, lot of business fees for being a CFP, required annual education fees including for B/D, RIA, FINRA, Insurance Licensing required ongoing education, software, web fees etc.)

 

[Mandala]

$1M is not "rich" or "elite" anymore. If it is, everyone who owns a house is rich.
It is simply the target audience for financial planners who work at Investors Group, Edward Jones, etc. With a 1% fee, they only need 20 clients to make a decent living.

You are not considering that client needs 1 million $ in investable assets,
which is not their net worth.

I looked it up. Less than 1% is elite

• Less than 1% of Canadians have $1-5 Million USD in investable assets

I agree the advisors set a high bar because they now need '' 20 investers'' as 1% of 20 million is
$200,000 but with overhead of office, staff, parties (the firm I went to rents a boat for the day so clients can cruise the islands and feel elite) that is not enough but 1 million is the minimum and some clients have several million in cash as well as an expensive home, car, kids at private school etc so they
are clearly elite

I would think 20 clients is bare minimum

As an advisor you need to be well educated on finances, impress people and calm them down in a bear and basically kissing ass and dealing with people like me who suffer from kruger dunning effect etc so it is not an easy job

 

[Zoot Allures]

Unfortunately, I can not.

I have been in the business for 40+ years, coming from a CPA firm background. I founded a small B/D many decades ago, with about 100 reps in six states.

However, I can not be specific about any particular fund or security, and I can not advise anyone outside the US. I can not advise Canadians since you are not yet part of the US.

I am participating in this forum only as a knowledgeable investor, sharing only my personal broad thoughts and general comments. I am not giving specific advice or seeking any business relationship.

I could not be specific unless I know you meet suitability criteria, such as your risk tolerance, objectives, holding period, income, net worth, tax bracket, etc. All suggestions must be in your individual "Best Interest." All recommendations must be documented with compliance. All emails are archived, and I can not use SMS messages unless via a specified server that is monitored and archived.

We can only use approved forums for business. I have a website and am on LinkedIn, Facebook and X, but all postings have to be preapproved by compliance and archived. I am about to post two compliance-approved April updates, but I can't give you links.

That is why you won't see many posts here by us in the business, at least on anything other than general information in our personal view, since Canada has similar rules, I assume.

I appreciate your advice Dave. You are being kind.

I wish we could go deeper into actively managed funds as that is crucial.

Personally, I stand my ground that passive funds beat active funds

Accepting your proposition there are such alpha funds that beat the market,
differentiating real alpha funds from the pretenders is an impossible task as past performance is meaningless.

My reasoning is there are so many thousands of actively managed funds some will have
a track record of many years of success by mere chance.

I would need a fund with a history of 20 years of alpha for me to be interested but even
then I would not jump as I would expect such anomalies by chance.

25 years of alpha would peak my interest but I am talking some very serious alpha after MER
to accept double risk. By double risk I mean the risk of the market plus the risk of the
fund managers decisions

Inform me if I am wrong, but there are no such funds for a reason

 

[Zoot Allures]

You need a million before they accept you as a client

As I walked in there was a big sign that said 'Welcome Mandala' then as I turned to walk out of such a display
meant to influence my decision I was collared and lead back in so I stayed and this is my report

There are roughly two ways they invest

Buying individual stocks
or
invest money in index funds or mutual funds and they charge 1% and everything, like taxes and MER of funds, you pay for

After their sales pitch, I talked to the clients as I ate the firms food, which was pretty good as they have a full kitchen
with a chief for such events. The clients I talked to did not know how their money was invested and
what their return is or what the risk was yet they all said the firm was excellent. WTF????????????

Some rich people do not deserve to be rich


You can buy the index funds on your own for a few basis points or pay the firm 1% of a million . I refuse to buy mutual funds
with their absurd MER of 2.5% and I refuse to let any firm invest my money into individual stocks as any evidence
the firm pulls out to confirm their stock picking wisdom can be so easily twisted it would have no value other than
issuing a huge red flag if they promise huge returns because they use hedging
IE extremely risky nonsense like currency betting going short etc. that I can
now participate in because I am one of the elite

I am of the opinion that there are no investment clubs for the elite rich that give elite
investment advice

For, example, hedge funds are for the wealthy only by law because of their inherent risk.
The law assumes wealthy people are finacially literate while the poor are not.

But, anyone who buys a hedge fund is finacially illiterate IMHO as they are far too risky
and grab over 20% of profit! You are a total sucker if you invest when the firms motivation is clearly to take huge risks.
Amazingly, there are only certain days of the year you can withdrawl from a hedge fund so no taking the profit and running so you have to sit and watch as you lose everything. Imagine the stress! That alone screams stay away from hedge funds

Investment skills are available on the net for free to both the poor and the financially illiterate

Most of these rich man's clubs investment firms seem to buy the index for a very simple reason - they are the best and easiest investment. A club for the elite that invests in indexing is anything but elite as anyone can do that

In this vid, Ben Felix argues against financial advisors while he is a financial advisor for the rich IE one million minimum

As well , he invests only in indexing and charges 1% plus expenses like MER

He states you may not need him, or any advisor, for his main value is saving and market discipline
not rarefied wisdom

 

[newguy20]

You are not considering that client needs 1 million $ in investable assets,
which is not their net worth.

I looked it up. Less than 1% is elite

• Less than 1% of Canadians have $1-5 Million USD in investable assets

I agree the advisors set a high bar because they now need '' 20 investers'' as 1% of 20 million is
$200,000 but with overhead of office, staff, parties (the firm I went to rents a boat for the day so clients can cruise the islands and feel elite) that is not enough but 1 million is the minimum and some clients have several million in cash as well as an expensive home, car, kids at private school etc so they
are clearly elite

I would think 20 clients is bare minimum

As an advisor you need to be well educated on finances, impress people and calm them down in a bear and basically kissing ass and dealing with people like me who suffer from kruger dunning effect etc so it is not an easy job


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I haven't done any real research on this but a quick google search says that almost 3% of Canadians have $1,000,000 CDN in savings. To be in the top 1% you need almost $10,000,000 CDN.
By these standards, I'm doing pretty good I guess, but I certainly don't feel elite or rich.

 

[speakercontrols]

value is saving and market discipline

This.

 

[Dave in Phoenix]

I appreciate your advice Dave. You are being kind.

Accepting your proposition, there are such alpha funds that beat the market,
differentiating real alpha funds from the pretenders is an impossible task as past performance is meaningless.

You can not look at Alpha alone but in relation to Beta. A high positive Alpha with high Beta, especially during a good period, simply may mean it is taking on lots of risk. We saw this dramatically in some of the large tech AI-hyped stocks (that are the largest part of the S&P500), which had some of the largest losses in the recent tech swoon.

Twenty-five years is too long. It's meaningless, probably with different managers, etc. I evaluate over 3-5-10 years and follow Morningstar data and their Analysts' reports. I have a watch list in an MS portfolio of about 150 funds I monitor.

You say past performance does not assure future results, yet you rely on it when you favor an index fund, which is tossing your dart at that dartboard without evaluating the fundamentals of what you are buying.