In an opinion column in the Globe and Mail the other day, it was suggested a lone retail investor would not be able to analyze and select equities any better than a professional investment analyst/ portfolio manager

The key arguments are:

• whether a buy or sell side analyst they generally have years of training, personal experience and can draw on the experience of their colleagues
• the analysts generally focus on one or two equities or at very least concentrate on a single sector
• their day to day focus is to study the data and draw conclusions/make recommendations with associated documented rationale

The conclusion of the opinion piece was individuals who wanted to manage their own investments should buy ETF’s (exchange traded funds) which are generally low commission and linked to an index, commodity or hedge strategies (to name some of the top associations)

That is, you can’t beat the experts when it comes to buying individual equities so go with group think.   This thinking does not conform to my own opinion .

Worth the Effort?

As I have noted before it’s your money and you have the most to lose or gain.  Making a bet on a fund is just that, gambling.  Relying on an investment advisor or portfolio manager who are  basing their recommendations on others work (the analysts) requires a lot of trust and faith.

Spending the time to do careful research, arriving at my own conclusions is extremely effective for me. Firstly I see the value in spending the effort personally.

More importantly though whether I gain or lose I took the risk, I made the decision and win or lose I can own it ( after all, it is mine to own).

Of course if things are not working I can always switch my strategy.  Fortunately, for me, with over 20 years of equity investing I am averaging over 15% a year. ( And that is without funds -yuck).