I have recently been almost "attacked" by relatives (particularly Dad and and father law) about what to do with their investments. I had begged these people to get out just before the top partly because of my trading and partly because of things said by mark boucher, John Bogle and others research. However I have never wanted to manage others peoples accounts or even give specific advice because I am a trader and they are not. However, these people and others do not want to go to just cash they want their money to work for them and most people do not know financial bull___ when they here it. Here are my questions how do you find advisors who place people into investments that have good track records. I do not mean brokers at firms who stick a client' age and money and projected needs in to some crappy "designed by a faux noble prize winner" asset allocator that comes back and says to get 12 percent a year you need to be 40% big cap,30 percent value, 10 percent overseas and the rest bonds. That software is based on bogus theory. And it has 99 percent of the industry spitting out lies. I mean I am looking for a person who has access to hedge fund guys and alternative investments who knows how to blend risk and has created diversified portfolios with nice sharpe ratios. Where does one find these guys? Secondly -- If I have to do the work myself where should I begin? P.S. My father in law just retired and his highly recommended advisor feed him a bunch of junk and lost 10 percent in the first month. P.S.S. I know this is a bit choppy but I had a few beers this evening when the conversation with my father in law came up after which I promised to help him out so this is where I begin.
I know this won't help you at all because I don't have a good answer to your question. My girlfriend recently asked me what to do with money she had inherited that she has been taken out to the cleaners by her "investment professional". I had no answer for her. After seeing so many bull market money managers blow up, I don't have much faith in investment professionals anymore. Also coming from a trading perspective I realize how bad many of the financial models are that these money manager use. I worked for a money manager that actually listened to analyst upgrades and downgrades. We all know how legit those are. There is a big difference between theoretical stock price and what happens in the real world.
Jem, This is my opinion, backed by some empirical research. First, most people just want to talk about it, and they will never act, so a brochure will do the trick. I always send people to Vanguard, they are on the web. They have by far the lowest fees in the business. Low fees are really the only edge that a long term investor has in the market. And most hedge funds, mutual funds and investment advisors fail to beat the market. Approaching 10 years, this number drops almost to zero. So why waste your/their time looking. Starting from zero, if they were to pick a small cap, mid cap, large cap, utility, reit and bond index, all available at Vanguard and put some money in each quarter over the long term they will do just fine. And if they have enough assets, Vanguard will assign a personal rep, so they would not be completely alone. I looked at this for comparison. The Rydex fund that shorts the Nas 100 index is up 45% this year. A Potomac fund that is an actively managed short fund is up 50%, yet the grizzly Short fund is up only 15%. And I think you could extrapolate if you looked at all short funds that most are not beating the indexes. Same as most failed during the bull.
clueless people belong in index funds.you arent going to find that special manager who will make you great money.if he was good he would be trading his own money and he will not want the hassle of small accounts. i like the mitts for family money.you are guaranteed to get your money back but if market rallys you get the increase.it may be a slower way to go but it will save your family relationship.
You could start with MoniResearch Newsletter... mutual fund timers with audited performance. It's on Google. There are other "performance tracking" sources for all investment classes.
I don't care if all you say is, "Why don't you buy an S&P index fund?" Then suddenly, you can't think straight. Here you are short the market, but you told them to go long. I agree, just say, go to Vanguard. Or tell them, put your money in a bank, let me trade, then tell me what you think you should have made, and I'll give it to you out of my own account, because that is going to be cheaper for me in the long run than worrying about your investments.
I spent the last 4 years working in the hedge fund space. When the market was good everyone was a hedge fund manager. Now people are starting to understand what a high water mark actually is..... Good hedge funds are very difficult to get into and have high fees. When I was in Bermuda at the Mar Hedge Fund conference last year there was a net work call HedgeFund.net Michael J. Rieger is a VP there, you may want to check it out. They have a lising of funds and a breakdowns of their startegies etc. The only thing is you have to be an accredited invesor to gain access.
thanks for the replys so far. I am leary of diversified exposure ala vangaurd becasue I do not know if the markets will be up or down in 10 years. That idea of the mitts is a good one in my opinion for at least for some of their money. Please keep the ideas coming I have already learned thank you all for posting.