Invest in Unit Trust - Fund Manager Blows Up

Investing in Unit Trust? Fund Manager Blows Up!!!

Many trained financial advisors and bankers advocates investing in unit trust. Or investing in unit trust. They advocates handing over your monies to professionals. It is so strange when they say “I will handle your monies and take good care of it”. As if they are really the one that are handling monies.

Financial advisors and bankers are trained to hand over your monies to professional fund managers to fiddle around with your monies. Investment is dangerous they say. Investment is complicated they say. Investment is best left to the professionals they say.

Therefore, it is imperative that these fund managers are good. You would definitely want these fund managers to be the Mark Howards, Peter Lynchs, the Ray Dalios and the Joel Greenblatts.

One tip given by Kenneth Fisher in his book “How to smell a rat – The five signs of financial frauds” is don’t invest in anyone if the investment strategy is too complex for you to understand or if the fund manager is unable to explain to you what they are investing in.

In this case, if the financial advisors/bankers is unable to explain to you in simple terms what the fund strategy is, don’t invest.

Your money is your own due diligence. Handing over your monies to strangers to execute strategies is simply dangerous. Even if they are Nobel prize winners, just think Long-Term Capital Management.

Investing in Unit Trust – Bad News

Recently, I came across a news of a fund, optionsellers.com where the portfolio is managed by the authors of McGraw Hill’s The Complete Guide to Option Selling.

Oh gosh, whenever I see the word McGraw Hill, it reminds me of textbook.

Most of their website is down, however, they market themselves to high net-worth individuals who are too busy to handle their personal accounts. They invites high net-worth individuals to hand their monies over to them to invest using their option selling strategy in “a basket of uncorrelated commodities markets”.

People who should invest in them are people who “seek real diversification, trading with the percentages and potential for outsized returns” as well as people who have more than $500,000 of spare cash.

What happened was that recently, investors of the fund received notification that the fund blew up. The fund made a short call position in crude oil which went against them so fast that overwhelmed all risk measures in place.

In conclusion, the fund lost their client’s monies. On top of that, they were margin called and have to return the monies that they borrowed.

Fund manager and Author James Cordier posted a video on YouTube announcing the bad news.

Investing in Unit Trust – Your money is your own due diligence

I am very sure that James Cordier is knowledgeable about options, he wrote a McGraw Hill book for goodness sake.

I am very sure that he has no intention to lose all the monies of his client. All of us at ITP trade options as well. As a matter of fact, all of us like options.

Options are really good tools. We does both selling and buying of options.

We are able to have fantastic double digits or triple digits profits using options. That came from the discipline that we have to follow our strategy, doing our homework, keeping with our position sizing and not doing naked/margin positions.

Your monies are your due diligence, although the fund managers has well-educated, knows about options enough to write a book about it. There is no guarantee that the fund manager will be sensible about it. It is simply a 50/50 gamble on whether the fund is going to make profits from you.

While the gamble goes on, one thing is certain, expenses. Expenses continues to pile up for investors regardless of profits.

Hence, it is important to know what you are putting your monies into. Many feel that investing requires huge in-depth knowledge, by-the-minute news and constant monitoring in order to profit. Therefore, it is best left to the professionals to handle their monies.

Both of which are not true, we have just seen that professionals are not immune to disaster themselves. Investors may sue James Cordier now, but the fact remains that their monies has been lost.

Investment in Singapore for Beginners

If you are looking for investment in Singapore for beginners, and if you want to prepare yourelf to take advantage of the opportunities the stock market presents you, you must first educate yourself. Chloe Lin, the founder of Invest Travel Play (ITP), was featured on Singapore national papers 联合早报 (Lian He Zao Ba) on 22 Aug 2018, which she actually shared a simple strategy to help readers to start investing safely with just $360 and building up your passive income in Singapore!

sean seah chloe zaobao

Want to learn how to make money safely and consistently from the stock market, check out Supercharge Investing Acceleration Program and it’s Skillfuture credit claimable. SIAP is a 2-day workshop that teaches students how to perform fundamental analysis on stocks and ultimately, decided whether to invest in certain stocks. Moreover, SIAP will also be teaching options strategy, a derivative which combines investing and options to increase your return on investment. If you are interested, check out SIAP now.

We have also written about articles about companies that are good to invest in, stocks that are not so good, the mindset that investors should have in the market, additional tools to use in the market, some other investment myths by professionals and perhaps some future lucrative markets.

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