Putting your money where your mouth is

This has been posted by one Mr sharadchandra joshi on one of the ***** forums. I think it Mr Joshi has raised a considerably relevant point
Two weeks ago, I met investmart portfolio managers at my house and they said that we could invest a minimum of Rs15lakhs and give them a power of attorney. They have one scheme where they invest on our behalf in the market and share the profits and losses in the ratio of 90:10. If there are losses, there are no charges. In the other scheme one has to pay 2% of the investments.
This is the first time I have heard of something like this. I see no reason why such a thing cannot be followed by the Technical analysts. All the more so because in a smaller timeframe, it is even more difficult to predict. Technical newsletters are more like glamorized tips and one can never really be sure of one’s own decision making especially if you have to choose 10 stocks to expect 2-3 to succeed. At least the Technical analysts should offer an option. For example, Mr Ashwani Gujral told me that he recommends a portfolio of 10 stocks for covered call writing. That has far more credibility than trying to choose out of some newsletter’s recommendations.

This qualification business is also a cause for concern. For investments, there are chartered financial analysts and Chartered accountants. In USA there are TA associations but here there is a free for all – no course, no qualifications and that too in an area which is more difficult and dangerous than investments. I know somebody who has started trading consultancy with two years experience. Mr Gujral's name is mentioned in various TA american magazines and he has written articles for them which can be one parameter. Otherwise, how does a layman judge?

One should also not forget that every good analyst does not become a good trader and that is ultimately what counts. How does one judge-"Kaun kitne pani me hain"?

Dear sir,

You seem to be so much taken in by this particular analyst about whom a friend of mine made an adverse remark sometime back.I checked with him again and since this is not a first hand account of my own I do not wish to post it here but I could forward to you the details if you give me your e-mail id.Regards

K Kannamthanam

kannamthanam@*************

I think that investors and traders should remember the adage "Let the BUYER BEWARE!"

Get rid of the "GET RICH QUICK" attitude and you will have less suckers falling prey to likes of the ones mentioned in this thread.

Its about time investor/traders take responsibility for their decisions in the stock market (wheather it is directly investing in the markets or through some funds/etc).

I am sure many investors till date do not understand the true realities of the markets. Be responsible for your own trading destiny. Be wary of depending on others for your success.

Finally don't blame others for your failures. This is an easy trap to fall into. No matter what happens, you put yourself into the situation. Therefore, you are responsible for the ultimate result. Until you accept responsibility for everything, you will not be able to change your incorrect behaviors.

My email is npoet2003@**********. It would be interesting to hear your viewpoint. I am a fan of lateral thinking and am all for contrarian/alternative views.

I have actually become more skeptical about Techncial analysis than the analysts. As it is people go around saying that it is more of an art.

Kindly mention (from traderji) in the subject to enable me to distinguish since this is your first email. Thanks.

As for "Ceveat Emptor" or let the buyer beware, it maybe true but that does not also imply that anybody can recommend anything and get away with it without accountability. Let the buyer be aware is there also in products but ISI is fixed on it so one knows. Here, who knows who has what credentials. If there is a profit, the anayst will take credit and if it is a loss, then they cannot get away with that Ceveat emptor clause. Even in medical science this clause applies but that does not mean that the govt does not try to check or punish the quacks and the public is warned to be wary of them.

"Taking responsibility of one's actions" is relevant but to my mind, more practicable in countries like USA where the investor education and awareness is far greater. In India, it can easily be a case of a "fool finding a bigger fool to admire him"

THE BUYER CANNOT BEWARE IF HE IS NOT AWARE (OF TA'S CREDENTIALS)

Yesterday this buyer beware thing was mentioned by someone in the Tally forum which is the best accouting package. I pointed out that in such a huge ERP package, it is impossible to check each and everything and certain things in the best package, one could take for granted. They have not given the option of giving the full details in the basic accounting books-why should anybody check this; it simply has to be there.

Last night I went at a party where some people were again cribbing about the analysts.

Just before that, there was a TV program in which former test cricketer Navjot singh Sidhu said that Saurav Ganguly could not rest on his laurels and must pull up his socks as a batsman as Yuvraj and Kaif are waiting in the wings. I read somewhere that with the kind of cricket following India has, the job of the cricket captain can be deemed next in importance after the PM’s job. Even if that’s an exaggeration, considering Ganguly’s record as captain, even he is not above scrutiny.

As far as I know, only former international level stars are allowed to comment or give expert comments and not first class cricketers.

Talking of cricketers, Rahul Dravid has just scored two centuries in the same test against Pakistan and is next to Bradman in the averages. I have read articles which state that he is more consistent than Sachin and bowlers of opposing teams value his wicket as much as Sachin's. Since people's money is on the line, should not the analysts have "DRAVIDESQUE CONSISTENCY"

When you talk in the context of analysts, how do you know what his level is-local, national or international(or who is Sachin, Dravid or Bradman as nobody knows their average failure or success) since there are no qualifications and no scrutiny or follow up of what they recommend. Even in the movies it is said that you are as great as your last hit. If well established cricket and film stars have to be on their toes, why not analysts?

Ideally speaking the TV channel itself should take precautions. In the first investor camp in Delhi, one gentleman raised this issue and immediately 4-5 people rose to back him but CNBC is also more concerned about eyeballs; I tried to prevail upon a well known lady presenter the need for the kind of awareness that is there in the US. Her reply was that they were not interested in all that and asked me for some “tips” on what I was doing in the markets.

With the legal system,loopholes and ignorance we have in our country, the buyer beware syndrome is deceptive and impractical.It can be misused by inefficient analysts as a shield. In the other forums, analysts have been named and abused. Forums can act as derivatives or leveraging; there can be high praise and and equal fall from grace. At least in India, they are the best bet as common people can directly interact with one another.

To my friend Jaideep

You will think that I have again drawn an analogy
This is directed towards those who are an apology(of an analyst)
The response to such people should be as to a candlestick doji
They should not be allowed to get away if they try to be dodgy

As for the reference to cricket
Analysts have a tendency to be out hit wicket
Unless there is some way of determining their bracket(competence)
TA recommendations shall be deemed a racket

Dear sir,

If you are keen on verifying the certification of analysts, there is this MSTA /FSTA thing- member of the sosiety of technical analysts or fellow pls check out http://www.sta-uk.org/ - there are a few known figures like Vivek Mahajan,Prakash Gaba etc who are qualified MSTAs there ought to be more people with such qualifications whom I do not know.I hope this helps in what you are looking for.

K Kannamthanam

Dear K Kannamthanam et all,

This MSTA / FSTA course just makes sure that the member who passes out with this diploma has through knowledge in technical analysis. It does not guarantee that that individual is going to be a good/profitable trader/investor/analyst.

During my last visit to the US I met a number of professional traders (some very popular ones) and not one of them had done any diploma/course, etc in any TA course. And among them many had developed indicators which are being used by us in our TA program.

Maintaining self-control and discipline is one of the most essential skills required for financial success. There are many ways that traders, especially novice traders, can lose self-control. They may abandon a trading strategy prematurely or take profits too early, for example (5 mistakes most traders make).

Trading takes patience, a trait that many traders don't have. The most disciplined people tend to avoid risk and are unlikely to get into the trading business. People who are attracted to trading, in contrast, are often independent minded rule breakers. They are drawn to the potential thrills that trading can provide. They may like the action, but many have difficulty maintaining discipline. If you have trouble maintaining discipline, then you might as well look elsewhere to build you wealth/capital.

Thanks to MR K Kannamthanam for the info. I didn't know Mr Gaba was qualified. Isn't there any American qualification?

Arun has a valid point. I have seen people from the same batch, same qualification and same institutes perform differently. Dhirubhai Ambani was not a qualified MBA or Mr Bachchan a trained actor. Good old Bill dropped out of Harvard.

Even if “proof in the pudding is in the eating” or performance is the right criteria, the issue is who monitors the performance. There is an independent credit rating agency called CRISIL for companies. Why can’t there be something like that for analysts?For judging a new analyst, qualifications do have a role.

Peter Drucker in one of his books has said that life is like a relay race and everybody cannot be expected to run equally well in all legs. Management at the bottom level is a science and at the top an art and the guy who is a good scientist need not necessarily be a good artist. All the more so in Technical analysis as there is a constant debate on how much of a science it is.

Even as it is management books are full of stuff on “It is easy to reach the top but difficult to stay there or striving is easier than arriving” . In post independent India how many people have achieved and retained excellence- Gavaskar, Tendulkar, Kapil Dev, Amitabh Bachchan and Dhirubhai Ambani(I should add President Abdul Kalam too) in a gigantic population.. Even if an analyst is good how do you ensure he retains his performance with changing circumstances?

In a crazy stock market scenario, this should be even more so. This profit sharing thing that Mr Joshi has pointed out is obviously a way out; only really good analysts would agree to that. The analyst for all practical purposes is a consultant and haven’t we heard the famous joke “A consultant is someone who borrows your watch to tell you the time, and then keeps your watch.”. This business of making many recommendations and then leaving the client to make the decisions seems more in this direction at least where trading is concerned. Investments being long term can be treated differently.

What Arun has said about traders finding it difficult to maintain discipline/patience would be true/false on a case to case basis. One cannot automatically jump to the conclusion that the trader is at fault and the analyst is not or vice-versa. The issue is that in their capacity as consultants how does one ensure that the common man does not get conned and how to ensure that the analyst is continuously competent if he is.

[quote=sh50]Last night I went at a party where some people were again cribbing about the analysts.

Just before that, there was a TV program in which former test cricketer Navjot singh Sidhu .....As far as I know, only former international level stars are allowed to comment or give expert comments and not first class cricketers. Right you are again.

Talking of cricketers, Rahul Dravid has just scored two centuries in the same test against Pakistan and is next to Bradman in the averages. I have read articles which state that he is more consistent than Sachin and bowlers of opposing teams value his wicket as much as Sachin's. Since people's money is on the line, should not the analysts have "DRAVIDESQUE CONSISTENCY" Right again

When you talk in the context of analysts, ......

To my friend Jaideep.............. [quote=sh50]



FIRSTLY, I LIKE THE TOPIC TITLE. "MONEY WHERE YOUR MOUTH" COULD BE A GREAT DETERRENT TO PAPER ADVISORS.

Now coming to the lower Caps & on a more friendly/less serious timbre;

My dear sh50, I must say again you're Oh! so shifty,
Never mind the cricket, you're ever so thrifty;
Your eyes are on the markets,
And your words are on the wickets,
So should I keep tabs on Rahul Dravid or the sliding SENSEX/NIFTY?

(A Limerick for a change instead of the boring verse)

Hi ,

100 % sucess with TA . HOLY GRAIL Found . It is responsiblity of Individual investor to do their own due dilligence before proceeding to next step . IMO