To cater to retail investors, there are essentially two species of sales person.
The first species caters to investors with your view. They will therefore try to sell you some kind of managed product. Behind this will be some kind of superstar trading team/investment managers. Their product brochures will be filled with the kind of serial correlated trading performance to convince you that this will be replicated in the future. This is preferred product to sell because such funds have high management charges and hence give the sales person much higher comissions.
The second species caters to investors who are more cynical after having lost money or seen friends and family who have lost money. To persuade them to invest, they use a mutated form of the EMH to sell ETFs and/or low load funds. To make their pitch more convincing, they will even run down the first species as being "conmen". As the comissions are much lower, the species that preys on such investors will try to make this up by volume. Often they will try to convince investors to invest their life savings in such "safe" "statisically proven" investments.
Between the 2 species, they have caused untold losses to small retail investors hoping to put a little money away for their future and their retirement.
The first species caters to investors with your view. They will therefore try to sell you some kind of managed product. Behind this will be some kind of superstar trading team/investment managers. Their product brochures will be filled with the kind of serial correlated trading performance to convince you that this will be replicated in the future. This is preferred product to sell because such funds have high management charges and hence give the sales person much higher comissions.
The second species caters to investors who are more cynical after having lost money or seen friends and family who have lost money. To persuade them to invest, they use a mutated form of the EMH to sell ETFs and/or low load funds. To make their pitch more convincing, they will even run down the first species as being "conmen". As the comissions are much lower, the species that preys on such investors will try to make this up by volume. Often they will try to convince investors to invest their life savings in such "safe" "statisically proven" investments.
Between the 2 species, they have caused untold losses to small retail investors hoping to put a little money away for their future and their retirement.
It seems to be, after all the twists and turns that the EMH has gone thru, that what we need is actually an IMH - Inefficient Markets Hypothesis!
I have always invested on the presumption that there will always be portions of markets that are inefficient on either short or intermediate time horizons.
Most of the financial managers I follow operate on the axiom that markets are inefficient and sometimes hugely inefficient. They have made good money over the decades.
Stock prices (and prices of financial instruments in general) are caused IMO by sentiment and money flow, rather than "information". Information that is the handmaiden of volatility, the real driver is capital flows which are based on a multitude of factors, many of which totally ignore the FACTS.
Should I be sent to Buangkok green for thinking like this???
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