Meetings with Fund Managers

In a previous life I used to be an IFA (Independent Financial Adviser), one of the aspects was helping people to invest their money for varying periods of time – a great responsibility and if you read my page on Buying and Holding you’ll realise that your Investment (time) life plays a very important part.

One of my major concerns I had was how to identify the right time to invest and the impact of investing someones money and then a market crash occurs – reducing people’s investment through the actions of the market.  If that could be avoided how would it help my clients investments, personal lives and investment lives?

To me the answer was obvious – Sit out the market crashes & significant falls.  (In the UK at that time the only options for investment were funds focused to the long side – NO shorting available)

Now if these fund managers are/were as smart as they made out and market wizards then if they could predict the upside then the downside was also predictable – right?  Wrong.  A massive wrong!

How come?

Most investment funds exist for the long-term investor and by long-term I mean 5 years+ they recommend that investors buy and hold as that way they ride out the market fluctuations – on the face of this, this is fair, but as we will see it might not be the best for your money.  Also we need to remember that most investment funds not only invest retail money – money from Joe Public – they ALSO invest money for pension funds, other investment funds, local governments etc etc all within the same fund – so no straight away we have big funds that once invested are designed for the long-haul.

This is why there’s so much promotion of buy and hold, don’t miss the biggest up days – what about missing the biggest down days??? – not highlighted by the fund managers!

Fund managers need to attract new money to their funds as one way of doing so is by hosting presentations and seminars of which I attended as many as I possibly could for both personal and work related reasons.  If you turned up to these events an hour before they were meant to start you stood a great chance of grabbing a coffee and meeting the fund manager 1 on 1 before the presentation – this was a great opportunity to ask real questions and get real answers and I made sure I did.

The upshot of this is that Fund managers do not know where the market is heading, I’ve asked them and they could not tell me.  The markets typically move upwards over the long-term with reactions along the way – hence the buy and hold recommendations and it these types of markets that the fund managers pray for as they’ll look good and expert in a bullish market……

But we know that occasionally markets will move sideways to do for extended periods of time – remember the only reason you would invest money is for it to grow faster than a bank account unless you might as well leave it in the back account right!  In this type of investment environment fund managers don’t look to clever – but these events on the market do occur and you have to aware of the fact – Ideally preparing for them IN ADVANCE.

This is why I truly believe that if you have the time and energy to learn how to invest and trade for yourself you can severely outperform the main markets at their own gain.  By doing it yourself you’re in control, buy, sell, hold the choice and decision is in your court as you please.

I’m actually, by utter coincidence attending on Tuesday 31st January an Investment seminar held by a very prominent Investment House in the UK – I like to attend the occasional one still just to get a (free lunch that’s close to home) feel for what’s being said to the IFA’s who’ll then spin it off to the retail crowds.

There is no real secret that global economies have over the ENTIRE history of the world grown both in terms of value and size,as we continue to grow in size so will the falls – but the over-riding fact has to be that overtime and in the long-run markets WILL grow until such a time where they terminate – that point in my estimation will be when the end of the world arrives.  But that is many many thousands of years away and we don’t live that long – so it is vital that when you need to make investment growth you do so during YOUR investment life-time.  If your personal investment life coincides with a sideways or down moving market there’s nothing you can do and all along the way the Fund and Investment managers will be saying “get on board for the next bull market, you don’t want to miss it!” Although you now KNOW that if they are wrong on the timing they’ll still collect their charges and fees regardless of whether your money grows or not.  Also remember that there is nothing you can do to reverse a markets direction – you can only follow it.

Remember, to the big guys you ARE just another customer and a number – to your Financial Advisers you are more than a number, but the Financial Advisers looks up to the Fund/Investment manager for guidance on market direction!  Blind leading the blind when it comes to investments I’m afraid.

Is it possible to predict future market direction?  I believe it is and I’m on that quest this year – another blog post in the future will cover that aspect and I’ll be writing a Blog post at some stage on my research and finding into the great W.D. Gann – one of a handful of traders that actually managed in the early 1900’s to discover what really moves the markets.

Remember if there’s a topic you’d like me to cover send me an email (thehovistrader at gmail.com).

I’ve some additional detail to add to the main pages on the site at some stage so keep peeled for that – I’m continually researching and as I come across new detail I’ll add to the site – If it’s crucial detail though that’s going in my Money Manual!

Until the next blog update all the best and happy trading

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