In my opinion, this analysis merely shows that IBs are lousy in selecting top picks.
It does not really prove that picking stocks based on yearly timeframe does not work.
For every lousy IB 2016 portfolio , there is a counter argument in the form of paperplane, Tee Tom and OTB, which shows that paying attention to latest FA signals have chance of generating above average return
I am writing an article on this
Posted by Ricky Yeo > Jan 1, 2017 07:29 AM | Report Abuse
Did I critic? I'm just stressing the impossibility of picking stocks based on yearly time frame.
I think even if the time horizon expands from one year to 3 years or 5 years, the stock picks by the investment bankers above also can't show good return. Thus, it is not a time horizon issue for their bad result in 2016.
If it is short time horizon issue, why so many i3 stock pickers in 2016 contest can beat the professional investment bankers by that much. Their stock picks also base on 1-year period.
"For every lousy IB 2016 portfolio , there is a counter argument in the form of paperplane, Tee Tom and OTB, which shows that paying attention to latest FA signals have chance of generating above average return"
The above is called majority's perception based on (1) "latest available information".....its quite easy to understand why an improving earnings has the biggest impact on the stock price as it is "the most influential variable mathematically to change the IV of the stock". It changes the FCF in the DCF model...or whatever model one may have...having a good common sense on probability of what this means to the future.
To gain from above strategy - on has to be at the sharp edge of the information flow - the earliest to receive & analyse correctly this date - not everyone can be at the top of this game...and its like the sinusoidal wave of zero sum...for everyone top fellow there will be a bottom fellow...and many sitting in different region of the wave amplitude. i,e for every winners there is an equal loser.
As such the above falls under speculation...if i stretch it a little.
What we need is (2) "long term improvement of the companies earnings"...and who can provide that? - they are the gurus which all the long term "investors" seek.
These are gurus who can share why they think the companies has MOAT & has huge reinvestment potentials..i.e growth and that its selling super cheap currently.
I believe there is no perfect stock pick unless you are dynamic to change your pick when you see opportunity. Who ever has pick Ekovest, Mycron, Gamuda from begining till end are the true winner
There's no definitive answers to why fund managers haven't done that well against benchmark, it is like how are you going to separate luck from skills. It can be that indeed these managers are so bad, or it can be that one year is too hard to prove anything, or it can even be that their picks are to encourage investors to trade to increase fee commission instead of picking true winners. Or it can be a mix of all.
@eagle71 - If you go to casino and notice a gambler just win 200% return on his original capital, would you conclude that gambler is a legend? If not then why are you asking questions like why many ppl in i3 can outperform these research houses. I can just as easy find a noob that makes 100% on the last week of December alone, would you say he is better than these analysts?
@eagle71 - Since you mention time horizon doesnt matter. If you hold all the 78 stocks, excluding Suncon and OWG that are not listed 5 years ago, your return for the past 5 years will be 177.5% or average 35.5% including -3.18% this year. You will be the judge if 35.5% per year is considered good or bad.
Even if I only included the 44 stocks that registered negative return this year, their 5 years average is still 31.8% per year or 159.04% overall. Average can be bias when there are stocks that gain alot like IFCAMSC over the 5 years, even using median, you get 9.8% for all negative performing stocks.
IB's can suggest...but they can't predict the outcome...as what warren buffet say “You can't produce a baby in one month by getting nine women pregnant.”...that's right...Time horizon plays a crucial part in your success as an investor over the long term.
Ricky is smart. Old man return is also poor in a year period albeit saying he is a superior investor vs chartist or whoever comparatively. If old man is pro investor which I doubted and thinking about my pocket, with low foreign holding n poor return could this means bursa is at a lower range of a cycle readily to be going north? I pun tak Tahu...
Sum up Ricky Yeo intention of this article: making wealth in stock market is a long term commitment, a year result give no judgement about the investor decision process whether is on the right path or wrong path. perhaps he is really skillful, perhaps he is lucky this year, perhaps he is lucky n skillful. Only Allah know. But when you hit it luckily or luckily with skill please write an article saying how you ignore the chartists n fundamentalislt advise n hit home run. Last statement I added myself. Hopefully then got a PLP guy keep supporting my home run article.
truth is many are losers in i3 trying to say IB not good at picking good stocks so that innocent people will fall victims and support their buy calls here.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
CharlesT
14,924 posts
Posted by CharlesT > 2016-12-31 15:35 | Report Abuse
No wonder some once said monkey may do a better guess