A few days ago, I came across a tweet from an investment advisor that started by saying, “The secret sauce of every successful investment manager is the investor.” “Attracting the right kind of investors is the key.” On the face of it, this sounds like a strange idea. It appears to say that if an investment advisory service is to succeed, then it should attract the kind of investors who are going to succeed or something like that. Essentially, something circular gets you into a chicken or egg situation about what exactly is happening in the case of a successful investment advisory. Is it giving good advice, or is it just attracting the kind of investors who are primed to succeed?
In Value Research’s various publications and services, we have a legion of investors who have generated wealth in mutual funds and stocks. What is the secret to this success? Somehow, are people who are predestined for investing success uniquely attracted to value research? That would be too much of a coincidence!
The reality is that an investment advisory service and the investors who are its members are a partnership. In my experience, there are three kinds of investors:
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