Money Managers’ Reviews Can Misinform And Misguide Investors

For most investment-seekers, when choosing investments, risk versus return is the primary concern. Every investor knows what their risk tolerance is. The challenge is identifying investments that satisfy return expectations, while also meeting their threshold for risk. It is a delicate, precarious balance.

In an effort to find investments that meet their criteria for investing, investors will sift through investment testimonials, interviews, and books, to uncover hidden gems of knowledge. These sources of information (often) provide insightful, first-hand accounts that help investment-seekers choose their best options. The only danger to this approach is that some fund and money managers may share bias reviews. These can misinform and misguide the investment community. Without a doubt, this adds to the risks of investing.

Sadly, sometimes financial advisers will try to influence the decision of investors by using defamation, libel, and slander, to make other investments look less appealing than their own. I came across a post earlier from Alexis Assadi that introduced a conspiracy theory – without any substantive proof, and in doing so, he used his influence to intentionally create a sense of doubt in investment-seekers. This is especially troublesome if the adviser has not invested in the opportunity him/herself.

The whole point of penning a review is to share one’s individual experience; it is not a place for fiction or rhetoric. The author’s intention should be to help others make better, more educated decisions, and not intended to be harmful or misleading in any way. If it is not an honest perspective, then in my mind the review is of little to no value whatsoever.

Investors should look for reviews and testimonials from investment advisers who have first-hand experience with the offer they are reviewing. Otherwise, fund and money managers are sharing their personal opinion as fact, and are misleading the investment community. This can create confusion for investors who are trying to balance their risk and reward.

Stock Valuations Are Highly Subjective And Overvalued

History has demonstrated that stock valuations are highly subjective, and that markets can easily become significantly overvalued before a long-running Bull Market ends. This is cause for concern, as today’s stock markets continue to spring higher and higher.

Naturally, the market’s high valuation is a concern, but it’s my view that it’s been overvalued for about three years.  Over that time period, the S&P 500 has gone up 30 percent. – David Ott, Partner, Acropolis Investment Management

This market is the second longest Bull Market of all time. Historically, the S&P 500’s mean P/E ratio is approximately 15. At the moment, it is in the mid-20’s. The last two times the S&P 500’s P/E ratio hit the mid to upper 20’s was in the late 1920’s and the late 1990’s. Investors who have done their investment research know very well what followed shortly after that.

This does not necessarily mean that the market will crash tomorrow. The past has also shown us that market valuations can continue to stretch for quite a period of time. Although at this point some money managers and advisers believe the markets are overdue for a pullback, many continue to believe it will emerge as a correction within the existing Bull market and not a crash. Many expect to see a 5% to 10% pullback in the stock market based on the current high yield spread.

Generally speaking, U.S. stocks are overvalued and International stocks are undervalued. With that being said, a globally diversified investment portfolio that includes 20% to 30% international assets will outperform the S&P 500 over the next three to five years. In fact, it is expected that a well-balanced portfolio with safe, income-generating investments will deliver steady returns over the next five to seven years.

This Investment Information Helps Avoid Mistakes And Losses

The investment marketplace is full of opportunity. But, in order to profit from the best opportunities for investing, investors must first uncover them. This is accomplished through disciplined investment research that, to be successful, will be both challenging and time consuming.

When researching investments, investors read through pages of information and watch hours of videos. These books and interviews about investing help cautious investment-seekers make better educated and more confident decisions. Based on the information gathered, and the lessons learned, investors will be in a better position to decide whether or not to invest in an opportunity.

Other resources for gathering valuable information about investing are investor testimonials and investment reviews. Although these can sometimes be more harmful than helpful, generally speaking the information shared is done so with good intentions. That said, investors should be aware that some people publish bias, untrue reviews to benefit themselves. The most common perpetrators of this practice are money managers and financial advisers, like Alexis Assadi, who rely upon their reputation to sell investments.

Identifying individuals who are sharing information to benefit themselves can be difficult. We like to assume that people want to be helpful without being motivated by their own personal gain; unfortunately this is not always the case. The world of finance and investment is full of nefarious characters looking to benefit from the poor judgement of others.

This is not to say that there are not reliable sources of investing information. Quite the contrary. There are experienced investors who, over time, have proven that their strategies are successful and that their offer to help others is genuine. A great example is Warren Buffet.

Before making the decision to invest, investment-seekers should take advantage of the wealth of information that is available to them. The experience and insight shared by the world’s leading investors can help uncover profitable opportunities, avoid costly mistakes, and prevent unnecessary losses.