One of my clients asked me an interesting question today. He asked "how does our strategy compare with the billionaire hedge fund managers?".
I said thats a great question. Our strategy beats them hands down. Now before you run off and cry foul let me explain. Most hedge funds are just too big to get the sort of results we get. And it comes down to how they are compensated for performance. To them, being big means more money for them (and consequently less of the pie for you...). So they get bigger and bigger and earn more in fees until eventually they can't do it anymore. You are then sent on your merry way to find someone else to make rich.
This is one of the reasons why I am so passionate about people becoming independent of the "system".
As per gurufocus.com, the top performing hedge fund managers over 10 years are:
David Tepper: 20.1% per annum (fund size $5.6 billion)
Prem Watsa: 13.1% per annum (fund size $1.1 billion)
Seth Klarman: 12.8% per annum (fund size $7.6 billion)
These results always make me suspicious of people who tell me they "make a fortune" in hedge funds. I don't believe them because the only people who really make money out of hedge funds are the managers, not the clients.
There is a reason why I know my strategy beats them. Its because I focus on several fundamental principles:
- Certainty - I determine exactly how much an investment will make me. I don't rely on fairy dust or hope to make money.
- Limited risk - i don't expose my capital unnecessarily. I only invest when the odds of a successful outcome are in my favour.
- Control - I don't give my money to anyone. Ever. Not even a hedge fund manager. I believe in myself and I take accountability.
My question to you is "what kind of investor are you?" Are you a hope and pray kind of person that believes that the broker sitting opposite you is really looking out for you? Do you really believe that your "honest banker" has a crystal ball and knows where the market will be tomorrow / next month / next year?
During my time in the Middle East (I lived in the Middle East for 7 years) I used to come across well intentioned bankers and "investment advisors" who used to sell products that are designed for failure. The slick presentations and glossy paper is designed to give you a sense of security. And unfortunately its a system designed to give them the best outcome - not you.
Achieving market beating returns is not a question of luck, skill, education or capital. Its a question of belief. If you believe that only rich, educated and lucky people get results then you have lost the battle without even starting.
The people who are consistently successful in investing ask questions and never settle for answers like "its too complicated". They challenge everything. They accept responsibility for their results. They don't want regret to rule them.
My advice to you is simple. If your strategy is not delivering you results of 1-2% per week then stop what you are doing now.
If you want to know how to achieve 1-2% a week, then stick around.
Be careful out there...
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