Tipster, You are Fired!
I started writing about equity investing on this particular blog from February 2009. However, I have been investing on my own for last eight years or so. Over these years I have learnt a lot about equity markets, macro economics, stock advisors, tipsters, mutual funds managers, etc. I am sure that you also have had your own experiences the good, the bad, and the ugly.
Ever since I started investing, I have always been intrigued by the stock advisors, tipsters, some of the mutual fund managers, portfolio managers, etc. In short, I am talking about the stock tips and stock advising profession. This is the profession which claims to take care of our financial investment at a fee (and off course with no return of any quality service).
- I fail to understand if they are so sure about their tips and advice, why they are giving to other folks. Why are they letting their secrets out.
- Why are they not using that advice for their own investments and make more money?
- In last few years, there has been surge of blog spots (with business orientation) which charge fees to provide daily tips by emails or on cell phones! Funny aspect is many claim they want to help people make money. That is a load of crap!
- These tipsters want to help people why not provide free tips? Why ask for subscription?
- Another surprising element is the claim on success rates. Majority of these tipsters purports 80%+ success rate. Yeah that’s right! If your tips have 80%+ success rate, go use your own money to trade? Why are you giving me tips?
- Just think, if 80%+ success rate are true, why the market is down more than 40%? With that kind of success rate, it is just not possible for market to go down that much. Some will argue with me that profits can be made on short selling. But then how many tipsters advise on short selling? How many times has your own tipster provided you tips on short selling?
Unfortunately, majority of individual investors fall for this gimmicks because of our quest for instant gratification, our quest to make that quick money without any hard work, and our quest to be one up than our neighbor.
Folks, there is nothing called free lunch. These tipster and pseudo advisors have no clue if their own tips will work on not, they are only interested our subscription money! They are playing with our fear and greed.
In every everyday lives, we all use some kind of measuring parameter, we weight it against a common platform, or common barometer to measure the quality. All companies use SEBI framework for disclosure, banks follow RBI rules, in your work place you have yearly evaluations, state of pricing is weighed against inflation, economy is measured with GDP, and even our parliament goes to public once every five years.
So how come these tipsters go scott free without any performance measure? I always wished if there was a way to measure the quality of these tipsters.
My recent experience…
In last few days, I have been asking one question to some of these online tipsters using their comments section, what is your rating? I asked them do you have any independent rating which measures performance of your tips? I left messages informing them, I will pay ten times your subscription fee; just show me your independent rating. Needless to say, none of my messages were displayed, all were moderated out. Two tipsters sent me email message; one said, “there is nothing called independent rating”, another one said, “I will waive your subscription fee, only if you give me 2% in profits, and there is nothing called sharing of losses”.
I responded by saying what about MoneyVidya Rating or ratings by any other similar online stock picking community? It’s been more than a week; I am still waiting to hear from them!
We get fired when we do not give our performance evaluation to our boss. My tipster is not giving me his performance rating. He is not willing to listen to me.
Tipster, you are Fired!
moneyvidya, stock advice, tips, tipster
Excellant post. Opening the foolishness of believing the tips or tipsters. Such self acting gurus are the major bottlenecks a beginner investor should avoid. Most of the beginner investors falling to such promises and losing money. I have also asked to some guys about their personal portfolio to show how much you are holding the stock that they are recommending. they have point out an idiotic word at the end of such reports “the writer personally not hold any of the stocks that he recommending”. It means, those who have mouth, can say whatever they want. This is called the unethical activity.
To show my total support to this article, I am linking to a similar article I have posted some weeks back: http://www.investinternals.com/2009/02/how-to-treat-analyst-report.html
Sherin
The Money Maniac
Sherin’s last blog post..My Dream Eco friendly home features
Sherin,
Thanks for your comment.
Sometime back I saw a tipster ad. It said, we make millionaires! My reaction was, “Millionaires who, the clients or you yourself?”
You have articulated it all very well. Hope more people read you and be forewarned.
Ranjan’s last blog post..Expectations from The Personal Finance Workshop
Ranjan:
That was good one! Why don’t they make millionaire themselves instead of asking investors for few thousands?
Thanks for stopping by.
I am with you on that one, stay as far away from tipsters as possible.
Manshu: Thanks for stopping by!