Here I explain in detail why chasing after Extraordinary Returns in Stocks Investing is not Worth your Time

Show Transcript +

CF: 'At Black Rock, Machines Are Rising Over Managers to Pick Stocks', meaning that even at the largest fund management company in the world, around the world, they are actually replacing human when it comes to stock picking, with machines. Because you see, machines can do a more efficient job. When you say that you study value investing, and then go and I pick stocks, actually, machine can do that more efficient than any human you see.

Andrew: Yeh, haha.

CF: Okay, so is another article I want to share with you is someone that is sold about $400,000 Berkshire Hathaway Shares.

Andrew: Mmmm.

CF: This is actually an author. He's called the millionaire teacher, not sure if you heard him before, Andrew Hallam.

Andrew: No.

CF: Now just go to this article. I only want to highlight this very good words. Now you see. The legendary investor learned that you could beat the market by picking small stock with increasing momentum. So the so called "momentum" that one is okay. Yes, it's correct but today most active fund manager knows that. The market has changed. Professional investor, even retail investor also know value investing right? With all the tools and system

Andrew: Uh huh.

CF: It only gets more sophisticated.

Andrew: Yep.

CF: Okay? So even Warren Buffet would have a tougher time to beat the market.

Andrew: Yep.

CF: ...this book which you can buy through Kindle or Amazon, this is the book - the Incredible Shrinking Alpha. Alpha means out-performance, eh?

Andrew: Ah, okay.

CF: If the index perform 10% and today your stock fall 15%, so you're Alpha is 5%.

Andrew: Okay.

CF: Okay, so this book saying that why it's getting harder and harder to actually outperform the market now.

Andrew: Okay.

CF: Because you put in a lot of time but you just out perform the market by 2%, it's not worth your time la.

Andrew: Okay

CF: That is the gist of the story yeh.

Andrew: Ah, okay.

CF: Okay if I spend a lot of time to do something-  if my result is double then I think worth it. But if my result only 2% after, no need la. You better bring your family, go [kai kai] go shopping Midvalley and all that,  you see?

Andrew: Mmm.

CF: Ah. So.

Andrew: Is a new thing you have discovered, huh?

CF: Yeh, yeh, yeh. I mean, I'll find, you see this right? This Alpha, means out performance here but it doesn't mean it's easy to find or even worth pursuing because the amount of work you do in value investing... you do the research, analysis, even that you have time now, you realize that you do so hard but you actually outperform just by a margin compared to you investing in an index you see?

Andrew: Yeh, so there's 2 things here okay. I never knew about index investing until I attended the AdamKhoo course, the first thing he said, if you are lazy, then just invest in the index because he shows a bit on a chart and find a replacement level and just enter in, you know. Which is quite interesting, it was easy but because he has proven, show the chart, that in the long run, no matter what happened, the index just go higher and higher.

CF: The trend, right? The big trend.

Andrew: After a crash, especially after crash it rebound back, it's always higher than the previous high, no?

CF: Yep.

Andrew: If you're lazy, just buy the index and do nothing and just close your eyes.

CF: Yeh, but which index to buy, you see? That is the one. What I shared with you over the past hour is seems very easy because for myself personally, there are clients that are quite demanding you see. So, and they have no time you know, similar profile like yours so you have to find them something that really, you know give them advice on something that can really, not only easy but, it is better than perhaps 99% of the index out there. Because there's a lot of rubbish index also out there.

Andrew: Oh yes ah?

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1)  The #1 Surefire sign you are NOT an advanced investor
2)  The Detailed Proof & Analysis (real $$$ involved)
3)  What Warren Buffett said in 2016 contradicted with what he said in 1996
4)  How your #1 most loved investment will break your heart
5)  Evaluate if you are 'man' enough to implement this

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