I have some time in between meetings and sitting idle at a club in BKC. The folks next to me – are discussing markets and strategy. One of them is clearly a wealth manager and the other seems to be his customer. Can’t help listening to their conversation as I am sitting at the adjacent table.
Getting a sense of déjà vu as I hear the word demographics being pitched as the single biggest strength of our markets. Every time I hear this word, I can’t help going back to this conference I had attended in Taj Colaba (20 years ago) where Roopa Purushothaman (the analyst from Goldman Sachs) was talking of demographic dividend. GS had just released a report on the same topic.
Back to the conversation happening at the adjacent table, stocks are being shortlisted and the client appears satisfied. Great, that’s what really matters at the end of the day, isn’t it?
To each his own – but I have never got the logic of investing into stocks. 25-30 years back, it was a different era as buying stocks directly was the only way to take part in the equity markets.
But now at less than 1% per annum cost, one gets access to professional (mutual) fund managers who do a full time job of analysing markets and industries. Or at barely 5 paise per annum cost, one can buy an index fund.
I don’t know whom to blame. The wealth manager or the customer. A stock brokers job is to make his customers buy/sell so the rule of caveat emptor clearly applies. However, a wealth managers job is to give the right advice and for life of me, I can’t figure out how buying of stocks would figure in there.
Buying into stocks requires significant time allocation. That’s what mutual fund managers do and that is what they charge for. Their performance is out there for all to see and dissect.
So either the investor and/or his wealth manager spend the same amount of time and rigour researching industries/stocks .. or I feel they are better off allocating the equity money into equity funds, ETFs, and at best 1-2 discretionary pms.
Rest is all meaningless intellectualisation which usually comes at the cost of time and returns.
