If you pay peanuts you will get monkeys. At the same time though, if you pay better than peanuts but you still get monkeys, then there is still a problem. The fees you pay should generate value for money for you. This means you should pay the Managers who can generate alpha for you but cut those who don’t. Alpha generation is not easy, there is definitely a lot of monkeys out there getting paid a lot for not a lot of value.
As most of you may already know, extracting alpha returns from the market is a marathon, not a race. As Advisers, we have seen many clients cycle into products and quickly cycle out because they didn’t “get rich quick”.
There is an expectation that since we do this professionally, every trade we make will be a winner. However, the reality is that we are still bound by the laws of probability and for us to realise our edge which creates value, it takes time and a statistically significant number of trades. Rather than think of financial products as “get rich quick”, we tend to be “get rich slow”. In this post, I will dispel a number of myths that many new investors have and hopefully help you get more consistent results in your investments.