Knowledge hub

Step Two | Beware of market gurus

Back to insights

By startdig Markets and Investments

Every day the newspapers and TV are full of so called market gurus telling you what to do with your money.  The problem is that these ‘experts’ have a dismal record of predicting anything.  So what’s the alternative?  A long-term  structured approach to investing can help you achieve your goals and manage risks, without the need for a market guru!

Switch on the financial news on television, or pick up the money section of any newspaper, and you will see there are plenty of supposed experts, giving their opinion as to what investors should do.

But the track record of these market gurus is dismal. Year after year their forecasts are inaccurate, and very rarely are they held to account of their failure to predict the future.

But you might be thinking, what about those star fund managers who manage to outperform the market?

Surely all i need to do is find one of those to manage my money for me?

Unfortunately, its not that simple.

Research has consistently shown that only about 1% of fund managers beat the market consistently over the long term, and they’re almost impossible to spot in advance.

It takes 22 years of data to be 90% certain that a managers out-performance is genuinely down to skill, rather than luck.

And even those few managers who do outperform, generally recoup for themselves any value they add, in fees.

As for hedge funds, the evidence is that they perform no better, and that they’re far more expensive.

Every year hundreds of hedge funds and mutual funds are either closed or merged with another fund because they perform so badly.

The second step to successful investing, therefore, is to beware of market gurus.

The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

Ideas & insights

Knowledge Hub

Navigating Uncertainty in Share Markets

podcast

Forecasting the future | Unravelling the mysteries of market predictions and the lessons of 2008

Markets and Investments • Article

What it means to make consistently high-quality decisions

Wealth Planning • Article

These money intentions will transform your financial wellbeing

Lifestyle • Article