The secret weapon to beat the professionals

Highlights in this issue:

*** Your massive advantage over fund managers…
*** MWK embedded…
*** Double your money when the professionals take you for a fool…
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From the pen of Karin Iten…

Dear Investment Academy Reader,

As private investors, we have one massive advantage over fund managers. And it’s so counter intuitive, you’ll probably think it’s not an advantage at all; in fact you may think I’ve lost my marbles...

But here goes: We are allowed to make bad investments.

Today, Investment Academy investment expert, Bengt Saelensminde shows you how you can use this fundamental right to your advantage, it’s a benefit that just isn’t available to most professional investors.

Here’s to your financial freedom,

Karin Iten
For the Investment Academy

I worked closely with fund managers for several years and noticed an invisible ball and chain they drag around the office with them.

A ball and chain marked “fear of getting it wrong”.

You see fund managers have to justify their every investment decision. From the smallest private client account to the biggest pension fund, clients and colleagues question their every move.

The last thing a fund manager will do is make an “off the wall” investment that could leave him with egg on his face. Yet it’s the “off the wall” investments that can make fortunes.

Only the top fund managers with great track records have the authority to ignore the whispering voices in the corridor.

The rest, in my opinion, are “forced” to make investments that will rarely strike gold. Instead, they do everything they can NOT to stick out...

They wear the same suits, they read the same papers and they make the same conservative investments. And they make the same mediocre returns – not that that really bothers them.

Because as long as they’re doing what everyone else is doing (and that includes losing money at times) they earn the same megabucks salary as the guy on the next desk.

Whereas if they took a risk, failed and did WORSE than the guy next to him, they’d be fired.

So what’s this got to do with us?

You’re in a unique position

A bit of humility is all that’s required to beat these pros (and I can tell you that isn’t an attribute you’ll see on a fund manager’s CV).

When you think about it, most investments come down to a fifty/fifty chance of success; after all, for every buyer there’s a seller. So if you think it’s a good buy, somebody else disagrees.

Ironically, a shrewd investor can set the odds in his favour if he just has the humility to realise his investment might be a bad one.

Going into an investment knowing that there’s a good chance that you’ve just put your money on a loser is actually very liberating. And it’s how you can get the best deals.

I know this sounds a little weird, but let me show you what I mean...

Double your money when the professionals take you for a fool

If a fund manager buys into a risky share and it went wrong, his client would have thought him a moron for investing in the share. Perhaps many fund managers read the prospectus of smaller shares... but then the weight of his ball and chain proved too much to budge.

Whereas you and I have far more freedom than that – and we should take advantage of it.

I’m not condoning “crazy investments” for the sake of it. I’m saying we shouldn’t be overly concerned about facing a loss. Losses are inevitable. But don’t expect to hear that sort of talk from a fund manager.

Go read the brochures from any unit trust, or a pack put together by a stockbroker touting for trade. They’ll tell you that they’ve got the best investment team in the world... if they can’t beat the market, then no one can.

Yet study after study shows that there are very few funds that beat the market. And now we know why... it’s the invisible ball and chain they drag around the office. The fear of a loss... the fear of being branded a fool that keeps them from some of the best investments around.

Make the most of your independence. Don’t let fear of a loss stop you from taking the path less trodden.

Bengt Saelensminde
For the Investment Academy