Professionals vs Amateurs

According to definitions from the Wikipedia:
Professional is defined as “a person who earns his living from a give field” or “a person with extensive knowledge or ability in a given subject”;
Amateur is defined as “Someone who pursues something part time, as a hobby or not very seriously”

In sports, under normal circumstances, a professional will beat an amateur by a huge margin. An amateur golfer will never beat Tiger Woods (even if he uses only a 7-iron for the whole course). A casual runner will not run faster than Justin Gatlin or Asafa Powell in a 100m Sprint (either they are on steroids or not). An amateur tennis player who plays only on weekends can only dream of beating Roger Federer or Maria Sharapova (even with them having both hands tied together). Why are these people good at what they are doing? Aren’t they human like us? In my opinion, apart from being born talented, these so-called professionals have put in extra efforts, have been doing what they are doing day in day out, and most importantly, they have the PASSION and determination to do well in their games.

But there is one field where Professionals do not necessarily do better than us amateurs! In some occasions, comparing some of their scores to ours could even put them into abysmal positions. And that’s of course in the world of Investing! This is a playing field where we, amateurs, can beat a 7 figures salaried professional year in year out, if we do the right things! Need proof? Simply look at the Fund Performance table in the newspapers or magazines that track these. I am sure there are many of them who are currently trading below what they were selling 1 to 2 years back. People who have yielded positive returns over the last 2 years are considered to have beaten these professionals! People who have doubled their money or more over the period (I know people who did), can put these professionals in shame!

Well, that’s not funny. I have entrusted my hard-earned money into the hands of these so-called professionals years back and realize now that they are in fact worth way less than what I have paid for 2 years back! My own portfolio has done better! Why have I invested in those funds earlier if I can invest myself? I used to buy into the ideas that these professional stock pickers can invest better than us, with advantages like big research teams, super-skilled professionals (my ass!), superb past performances (this is where past performance doesn’t guarantee future success) and all sorts of crabs. Bottom line is, they want your money! And they want to charge you management fees as a “Professionals”, even if they fail! And they will brag about it like it’s a big deal if they return slightly above the Fixed Deposit rate, when in fact, even the indexes have done much better. In whichever circumstances, they are the winners and we are the suckers. I haven’t even mentioned those funds that got caught in the subprime mortgage crisis, where big chunk of their portfolios got wiped out in days.

Don’t get me wrong, I didn’t say that ALL professional fund managers are bad. There are fund managers that have truly earned my respects. One of them is Mr Tan Teng Boo from I Capital. If I have put all my money into I Capital rather than those X@#$%^* fund, I could be laughing my way to the bank right now!! Besides, there are in fact a couple of funds who did extremely well over the years too. Some top performing funds have even grew the clients' initial investment by a few times. My salute to those! Anyway, my point here is, do not invest blindly into funds. Investing in fund is NOT a fool-proof or sure-win strategy for investment. Things can still go wrong, and on occasions, terribly wrong! If one has the time and resources to do their own asset allocations, one should pick their own stocks rather than entrusted them into unknown hands. Trust me, the chances of success is much higher than beating Tiger Woods!

Reminder: If you don’t have the time to do the stock picking yourself, buy I-Capital (whenever it is selling near its NAV)!