I want to share what is probably my all time favorite pitch email. As an advisor I get emails like this daily. Usually they're portfolio managers or companies pitching their investment or superior investment strategy and not noteworthy. This email was so egregious I had to share.
Before I share the email: I try not to make a habit of knocking down other advisors, portfolio managers, investment strategies etc. There are many different ways to invest that will be successful, so I'm not going to mention the company who sent it.
Ok now let's dive in.
Right off the bat they're telling you they know when to be in and out of the market. We call this is market timing, and it is a quick way to lose out on market growth.
There is so much data out there on how market timing strategies underperform their benchmark. My favorite is the SPIVA Scorecard, which tracks actively managed mutual funds and how often they outperform their benchmark. Almost 9 out of 10 actively managed funds lose to the index over 10 and 15 year periods https://www.spglobal.com/spdji/en/research-insights/spiva/.
(Disclaimer: SPIVA scorecard doesn't only track 'market timing' strategies. There are many different strategies that fall into this Actively Managed label, but their research does allow us to compare any investing strategy versus index investing.)
It gets better. More of the email:
Now they use a scare tactic and mention what happens when the bear market comes. Ask us our plan to ride out bear markets like 2001 and 2008, the Recession in 2020, and high inflation in 2022. All good advisors have a strategy for down markets.
Ok you've got me worried, now what? They have 6 exit strategies for short, medium, and long time frames. Why 6 exit strategies ...maybe 2 for each time frame?
From there you get to pick from over 50 tactical asset allocation portfolios! Wow, talk about choice paralysis! So even if I know which exit strategy to pick I have to make a second choice among the 50 portfolios, further decreasing my chance of being successful.
My last, and favorite point, is that you can access these strategies for just $412.50/month!
If I knew when to get in and out of the market to capture growth and avoid dips do you think I would be selling it for $400/month? Why wouldn't I just execute the strategy and make a bunch of money? Maybe I'm altruistic and want to share it with the public...for $5,000/year?? That's not a small sum of money, and doesn't seem so altruistic. Further, why 50 different strategies if I have even just one strategy that works?
If it sounds too good to be true, it is.
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