The Massive Hypocrisy of the ‘Seeking Alpha’ Conference

Everyone one of us has visions of finding the next ‘YAHOO’ or Microsoft and turning a little into alot. This is not much different than winning the lottery. ‘Alpha’ is essentially your ability to beat the market. This can be done however there is no way to determine who will in the future.

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I reviewed all of their proprietary funds with data over a 1 year, 3 year, 5 year, 10 year and 15 year period. The percentage of these funds (in the aggregate) which failedto beat the returns of their Morningstar assigned benchmark ranged from a low of 67.57% to a high of 75.57%. Over the longest period measured (15 years), 66.05% of the 324 proprietary funds of these firms failed to outperform their benchmark.This is legitimate news, but you would not have heard about it from the financial media covering this event.

The pursuit of “alpha” has decimated the returns of millions of investors and enriched the securities industry, which claims an expertise that does not exist. By glorifying this elusive goal, the financial media perpetuates this myth, causing incalculable harm to investors.

As an alternative to “seeking alpha”, next year let’s have our own conference. We’ll call it: “Capture Market Returns and Secure Your Financial Future.” My wish list of speakers includes Eugene F. Fama, Kenneth R. French, Robert C. Merton, John Bogle, Roger G. Ibbotson, William F. Sharpe and Myron Scholes. These distinguished Professors of Finance, Nobel Laureates and authors can support their views with solid, peer reviewed data. It would be a refreshing contrast to the massive hypocrisy of the “Seeking Alpha” conference.

The Wall Street bullies have a vested interest in keeping you trading stocks. We are looking to get rich over night, while the best way is to get rich slowly.

Please comment or call to discuss how this affects you and your long term financial goals.

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Fantasy Alpha and Your Portfolio

Do Not gamble or speculate with your investments, this is only for ‘play’ money. To succeed in investing you need to know the expected return and the expected volatility(risk). Without this information you are gambling and speculating with your money. Seeking alpha is exactly what the Wall Street bullies want you to do. Money in motion is how the Wall Street bullies profit. And the fact that you amke or lose money is of no consequence to them. To STOP being bullied you mest own equities…globally diversify….rebalance.

  • It takes sup
    English: Wall Street sign on Wall Street
    English: Wall Street sign on Wall Street (Photo credit: Wikipedia)

    erior information to earn a superior return. Most people don’t have superior information or any way of getting it − they only think they do. Overconfidence is reinforced when an investor makes money. However, guessing correctly does not mean you’re informed, smart or skilled because every investment will either go up or down after you buy it.

  • Bet on alpha with BINGO money, not serious money. “Use BINGO money to gamble with, not house money,” my Grandma Ferri used to say. Only bet what you can afford to lose. Grandma’s BINGO money was the loose change she found in my grandfather’s overalls. I wrote about the difference in my first book, Serious Money; Straight Talk About Investing for Retirement. You can download the book for free on my website.

When building a prudent portfolio, seeking alpha should not be part of the decision. Prudent investors should be most concerned with how assets are allocated in their portfolio. This strategy will result in superior results.

Please comment or call to discuss how this affects you and your investments.

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