Koon Yew Yin 官有缘 - Why Fund Managers perform so poorly?
If you click this link, you can see that all the funds have lost money in the last 3 months and over the years, their performance has been disappointing.
All fund managers are highly qualified with some basic accounting or business degrees and some are CFA, Chartered Financial Analysts. Why can’t they perform?
All fund managers would or should know FA and TA , financial and technical analysis. Why can’t they perform?
The short answer is that they need more than FA and TA to perform better.
They must know how to control their emotional thinking process and think logically. If everyone can think logically, all the listed shares will be fully valued and you cannot find any undervalued share to buy. But this is not the case.
Most investors cannot control their emotion of fear, greed, ego etc. That is why there are more losers than winners in the stock market.
I am only a civil engineer and I only have a rudimentary knowledge of FA and TA.. But I know and understand human nature and behavior. The movement of any share price does not only depend on the financial performance of the company. It depends very much on human behavior.
As I said many a time before, no share price can continue to go up or fall down for whatever reasons. At some point in time the price movement will change trend. The trouble is that most investors including fund managers have the herd instinct. They behave like sheep in a flock, following one another. They feel very comfortable to act together. Very few fund managers want to be different. They all want to have the same result of their performance so that their clients cannot blame them if they did not perform because all other fund managers are the same.
Financial institutional analysts frequently recommend shares after they interviewed CEO/CFO of companies. I do not buy most of them because they are helping the companies to sell their shares. No companies will say that their companies are not doing well. They know that selling their shares is as important if not more important than selling their products.
But the institutional analysts are so naïve in believing what they hear. As a result their financial institutions buy the shares aggressively before they publish their recommendation so that they can buy the shares at cheaper prices than the public. As a result, all the funds are doing so poorly as shown on the record.
I must say there are a few who write like a professor of finance and often post their articles on i3investor to attract students. Before you pay, you must ask them to show their track record. How much money they have made in their life time from share investment?
Koon Yew Yin 官有缘 - Why Fund Managers perform so poorly?
http://koonyewyin.com/2016/12/18/why-fund-managers-perform-so-poorly/
