Dangers of Data and Trust being Tangible

In our world, everybody is an expert. It’s easy to be an ‘expert’ in investing. Why ? There is abundance of data. However there is a thin line between an informed investor and an ‘expert’ one.

Cost of being an ‘expert’

However, this ‘expertise’ can often come at some cost and that’s why it’s dangerous. Case in point, the current times. There is a whole generation of investors who had only witnessed upside in their short investing life, until they saw this : -)

Disclaimer : Any resemblance to any portfolio stock is purely coincidental 🙂

Too much of a good thing

Having said that, this post is not about dissecting data and trying to arrive at some ‘forecast’ based on that. It’s about the  problem of excessive data, in the hands of today’s investor. It’s natural to start making deductions out of this. All of this, while negotiating an extremely hectic and draining job of his own ( which by the way pays the bills).

Imagine arriving at an investing decision once you have read some neat deck on impact on global economy, in the aftermath of Russia- Ukraine war. Wouldn’t it be similar to a non-medico looking at their Lipid profile reports and arriving at some self-diagnosis ?  We all know how dangerous the latter is.

What’s the alternative ?

We are not building a case for the other extreme, which is to have blind trust in ‘experts/advisors’ ( Disclaimer : we have some conflict of interest here ). Figuring out the best approach, in an investor-advisor relationship, is what we at BuckSpeak spend a lot of time on. Without a doubt, this has a significant role to play in portfolio outcomes. The best news : you don’t need to be a finance guru to extract better portfolio returns. On the contrary, it can be a drag. So, what’s the solution ?

In our experience, ‘Trust in competency’. While ‘trust in Integrity’ is hygiene ( at least should be ), the former is often neglected and not fully comprehended. Trust in competency ensures :

• Not falling prey to ‘hot’ investing ideas
• Getting into opportunities when they don’t look that obvious
• Corollary to the above, not falling into ‘recent’ winners trap
• Seeing through ups and downs with substantial equianimity

And how does one build this trust ?

• Due diligence before you sign up
• Asking lots of common sense questions ( especially in the beginning of your relationship)
• Mutually agreeable process of decision making between the investor and their advisor
• Staying honest to each other

Nothing fancy, but ‘trust’ us, it works.

If you liked it, do share this with your friends/family/colleagues and ‘expert’ friends 🙂

Disclaimer : The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.  It is only intended to provide education about the financial industry.  The views reflected in the commentary are subject to change at any time without notice. Image has been used only for representational purposes. While lot of care has been taken to validate the data , neither BuckSpeak nor any of its employees should be held responsible for its authenticity. Investments are subject to market risk , please engage with professionals to take better investment decisions.

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