5 reasons retail investors can gain an edge over professional investors
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1. Cash flow issues
Fund managers have almost no control over the flow of money into and out of the fund
When markets are strong, more money comes in and needs to be spent
But a problem arises when the market is down and investors start making withdrawals...
Fund managers have almost no control over the flow of money into and out of the fund
When markets are strong, more money comes in and needs to be spent
But a problem arises when the market is down and investors start making withdrawals...
Large withdrawals in market conditions like we see now mean they're forced to sell in a panicked market
That's the exact opposite of what a wise retail investor would do
As an individual, you are in control of when you invest and can leverage market volatility to your benefit
That's the exact opposite of what a wise retail investor would do
As an individual, you are in control of when you invest and can leverage market volatility to your benefit
2. Commissions
The retail investing market has become extremely competitive
Most platforms now offer 0% commission trading
Whereas Institutional funds still pay pretty high commissions, often one cent per share or more
When trading millions of shares, this adds up!
The retail investing market has become extremely competitive
Most platforms now offer 0% commission trading
Whereas Institutional funds still pay pretty high commissions, often one cent per share or more
When trading millions of shares, this adds up!
3. The information revolution
Nowadays, you and I can get access to the same information as the hedge funds
And the information gap continues to close with platforms like @prospero_ai which brings hedge fund level AI analytics to the palm of your hand!
Sure...
Nowadays, you and I can get access to the same information as the hedge funds
And the information gap continues to close with platforms like @prospero_ai which brings hedge fund level AI analytics to the palm of your hand!
Sure...
@prospero_ai Fund managers can look executives in the eye and get a โfeelโ for a company
However, many executives are simply polished salespeople and can spin a story like you wouldnโt believe
When it comes to making investment decisions, its wise to let the numbers do the talking...
However, many executives are simply polished salespeople and can spin a story like you wouldnโt believe
When it comes to making investment decisions, its wise to let the numbers do the talking...
@prospero_ai And when it comes to the numbers
The information gap is pretty much closed.
The information gap is pretty much closed.
@prospero_ai 3. Market impact
When you're working with orders in the millions of shares
You need to like that $10 stock at $10.50 or $11 because thatโs what you will likely need to pay to get the position you want
This obviously limits potential returns
This is not a problem for us...
When you're working with orders in the millions of shares
You need to like that $10 stock at $10.50 or $11 because thatโs what you will likely need to pay to get the position you want
This obviously limits potential returns
This is not a problem for us...
@prospero_ai If you want 100 or 1,000 shares, you buy them
If you donโt get it at $10.00, maybe you get at $10.01
That price difference and lack of market impact on your trades over decades of investing can give you a significant return advantage over the big players
If you donโt get it at $10.00, maybe you get at $10.01
That price difference and lack of market impact on your trades over decades of investing can give you a significant return advantage over the big players
@prospero_ai 4. No one to answer to
All fund managers answer to someone
And not just their investors
If you had a boss questioning your stock selections, you'd start second-guessing yourself
If you turn out to be wrong, you are now an idiot and should have listened to your boss...
All fund managers answer to someone
And not just their investors
If you had a boss questioning your stock selections, you'd start second-guessing yourself
If you turn out to be wrong, you are now an idiot and should have listened to your boss...
@prospero_ai This means they can often make investment moves they don't necessarily believe in
Some funds need to have any new position approved by a committee
If one member of that committee disagree's, the move get's killed
And even if its approved, you have to wait for the meeting...
Some funds need to have any new position approved by a committee
If one member of that committee disagree's, the move get's killed
And even if its approved, you have to wait for the meeting...
@prospero_ai Losing valuable time in which you could have been benefiting from share price appreciation
But you have no boss when it comes to your personal investment account
You want to buy, you do it
No approval, no committee, nothing is needed
But you have no boss when it comes to your personal investment account
You want to buy, you do it
No approval, no committee, nothing is needed
@prospero_ai I believe that a dedicated retail investor can outperform professional traders for all of these reasons & more
But it's not easy
You have to be switched on, know how to research a business, read a balance sheet & earnings report and know when to cut a loser or add to a winner
But it's not easy
You have to be switched on, know how to research a business, read a balance sheet & earnings report and know when to cut a loser or add to a winner
@prospero_ai But the hardest part is getting started, picking a strategy & applying it consistently
This is why I build the Savvy Investing Club
To equip you with the stock analysis, education and mindset you need to win
Join here๐
financiallysavvy.gumroad.com
This is why I build the Savvy Investing Club
To equip you with the stock analysis, education and mindset you need to win
Join here๐
financiallysavvy.gumroad.com
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