Find An Investment Expert For Advice On Investing In Stocks

By Author: VVK Prasad Vivekam
Total Articles: 17
Comment this article

Investing in stocks fascinates many individuals across the country irrespective of their financial strengths. Picking up the right stock and exiting at the right levels are essential to gain from stock market operations. Though long term investing is advocated by some to be beneficial, staying invested in a wrong stock may see the whole wealth disappear. In order to gain, one must have his eyes and ears open to know the developments in his portfolio.

Opinions vary on desirability of stocks or ideal number of stocks in portfolio or on timing of buying and selling them. Every investor looks for a dependable advice or for source of information to process at his end and come up with buying or selling decisions. The acute need felt by investing community offers unlimited scope for professionals to venture into stock advisory services. However, Indian laws restrict people from playing a role of stock investment adviser, unless permitted by SEBI or exempted by SEBI in a few cases.

For someone to be called an expert stock investment advisor there must have been track record that can be verified by independent sources. ...
... A doctor is qualified to administer medicines because he / she underwent a learning curve that lasted for reasonably longer periods. Credibility of the institution where he studied helps him establish in the initial days. References from patients who availed his service play a larger role in turning him a successful physician.

Unfortunately though, amidst numerous stock advisory services in stock markets everyone claims as an expert and gets away with such claims. In the absence of any set standards to qualify being an expert, several dubious entities and individuals attempt to dupe the investors with attractive and unrealistic advertisements and assertions in public places. The rule of Caveat Emptor holds good and the gullible investors who fall prey to such claimants will only have themselves to blame.

Becoming an expert in stock markets may remain a dream for most investors but picking the right adviser is not that difficult if one understand the factors associated with investment advisory and the limitations of people offering to advise. The following factors will require to be studied to determine the desirability of someone to be approached for advice.

1. Accountability: One must ensure that stock investment advisors giving advice should be accountable to the advised. Without accountability, the person advising may not have enough reason to undertake research and study all aspects closely.

2. Ability: The person or stock advisory services offering advice must have the ability to offer advice, in the first place. An incompetent person can't be expected to become a good advisor. The professional competence of persons behind organization is an essential element one must not ignore.

3. Personalised Service: Advices can be general or specific. A general advice meant for broader circulation among all investors is less likely to be ideal for many of us. Unless the advice is offered after consideration of all personal factors, it can't be termed as personalised service.

4. Subjectivity Vs Objectivity: Excessive dependence on personal skills limits the ability of any advisor to reach larger number of clients. For an advisor, to be of true service, most of the analysis must be on objective criteria while some small element of subjectivity is welcome at a later stage. Analysis based on objective criteria can be back tested and adopted with confidence while subjective analysis is difficult to back test and lacks that conviction.

5. Follow up on advice: An advisor can be termed good only if he continues to track the investments opportunities recommended by him in the past. Since quarterly announcement of results is mandatory in India, every stock must be reviewed at least 4 times a year and the view be updated. Instead, if advisor only deals with latest advices, he may be avoided.

6. Custody of Portfolio: An able advisor does not need to take the custody of investor's portfolio. Instead, he will be comfortable advising the investors on actions warranted. Taking custody of one's portfolio may appear suitable for most investors but could place them in dark about what is being done on their portfolio. Given a chance, every investor should choose to keep the custody of his portfolio with himself and act on the advice of advisor.

7. Size of Portfolio: For an advisor, size of portfolio of investor should be of least concern. Whether the portfolio is of a few thousand rupees or several times more, his advice should be with same amount of concern.

Having understood the factors requiring your attention before grading an investment advisor / portfolio manager, let us review the different sources of advices that are being relied by investors in India. As on today, you can have advices flowing from Analysts on TV channels, Print media, Friends, Staff of brokerage houses, Portfolio Managers and stock Investment Advisors in addition to your own efforts. How do they fare on the factors discussed above is presented in a table below.

TV or Print Media:
Accountability - NO, Ability - YES, Customization - NO, Frequency - ONETIME, Follow up - NO, Portfolio based approach - NO, Cost involved - FREE , Custody of assets with investor - YES
Friends:
Accountability - NO, Ability - NO, Customization - NO, Frequency - ONETIME, Follow up - NO, Portfolio based approach - NO, Cost involved - FREE, Custody of assets with investor - YES
Staff of brokerages:
Accountability - NO, Ability - NO, Customization - YES, Frequency - SUSTAINED, Follow up - NO, Portfolio based approach - NO, Cost involved - INDIRECT COST, Custody of assets with investor - YES
Portfolio Managers:
Accountability - YES, Ability - YES, Customization - YES, Frequency - SUSTAINED, Follow up - YES, Portfolio based approach - YES, Cost involved - VARIABLE, Custody of assets with investor - NO
Self Study:
Accountability - YES, Ability - YES, Customization - YES, Frequency - SUSTAINED, Follow up - NO, Portfolio based approach - NO, Cost involved - EXPENSIVE, Custody of assets with investor - YES
Investment Advisors:
Accountability - YES, Ability - YES, Customization - YES, Frequency - SUSTAINED, Follow up - YES, Portfolio based approach - YES, Cost involved - VARIABLE, Custody of assets with investor - YES

From the above it is clear that free advices coming from TV or Print media and friends may or may not cover the areas of your interest. Follow-up coverage is least likely turning one's dependence on this route questionable. Staff at brokerage house is often rewarded well if they generate more volume or high churn of portfolios. Hence serving the interest of investors is unlikely in addition to the questionable competence of such low level employees. Self study is the best, if you have resources and time to spend. Portfolio Managers may be a better choice but many of them seek to have the custody of your assets transferred to them. From the standpoint of investors, Investment advisor route appears more suitable.

As a stock investment adviser, I can confirm that most members of the public have scant investment skill. This is not meant to be derogatory, but realistic fact because these things take effort, study and thought. In our time away from an occupation, we want to relax, not analyze annual reports. Life is too short and fast paced, to spend any time worrying if you are making the right investment decisions.

Among stock Investment Advisors, those who undertake research on larger basket of shares and are willing to offer insight on any stock held by investors may be preferred to those who do limited research or depend on some other's research. Since Investment Decision Making involves due consideration of several factors including the personal objective of investor, anyone who could coin standard variants of strategies apt for generic needs should be preferred.

Vivekam carries out research on almost all listed companies in an objective manner and has ability to offer bountiful basket of expert services and investment advice to investors of any size. The very fact that 'everybody comes to the stock market to make money' and 'nobody likes losing it' has made our stock investment advisors be extra careful in continually upgrading research input variables in order to make the right choices on a regular basis. Our stock advisory service derives its output from meticulous screening systems developed by a dedicated team of experienced professionals.

Our stock investment advisers believe that every investor is unique and customizes according to their holding capacity, return expectations, risk profile etc. Our stock advisory services offers an excellent opportunity to new entrants construct or restructure their portfolio in stock markets based on market physiology combined with technical analysis. It also has cost effective models of advisory service through web, which costs only about Rs 1,000 (one thousand rupees only) per year. For those needing a sustained advisory role, Products (Automated Investment Strategies) are offered. Detailed explanatory videos are provided at www.youtube.com/vivekamzone or on website www.vivekam.co.in