Have Anyone Benefited in Long Run From Paid Advice?

#1
Hi all,

I am a newbie. I want to know that all brokers offer paid advice on which stocks to buy and sell and there are many research agencies also which offer such advice for monthly payments. Do you guys have any experience subscribing to these services and do they have helped you?
 
#2
Hi all,

I am a newbie. I want to know that all brokers offer paid advice on which stocks to buy and sell and there are many research agencies also which offer such advice for monthly payments. Do you guys have any experience subscribing to these services and do they have helped you?
More than 99% are fake and just loot your money.

There are a few good ones though. For example, some Market Wizards (Jack Schwager's Book) had subscribers during their initial days and the subscribers did make a lot of money. So yeah. It depends.

I myself trade based on my own methods. My goal is to make 2-4% a month on my own trading rather than subscribe to someone. If I can do that, I'm happy.

But then it really depends on each individual. There is nothing wrong in subscribing if it helps you to make money. It would actually be a wise decision rather than trade on your own and lose money.
 

Alchemist

Administrator
Staff member
#3
I don't know of any trading tips service that makes money for its clients.

theequitydesk.com has a service for long-term investments (Basant's corner).

I don't track it, but I think it has been outperforming the market.
 
#4
How you guys do that? The only person I can see making money in stock markets are the stock broker themselves cause they have the experience and basically it's their job. how you guys after managing home and work manage to research the company to invest? I guess it must be either a too much work or with experience you are just able to compare few standard data to see the value in the company?

I am always hearing : you should research before investing? But how? I depend on IIFL research reports as I cannot do research on my own, but if they say buy some shares then how can I reason out whether to buy or not? Because I am depended on these reports are final words in investing. I have heard that some junjun* broker before investing in Titan shares sent his team to speak with the Titan CEOs+ before taking a decision to buy. This is definitely not possible for a retail investor, so I think research reports are dead-end and since we cannot put our own logic on top of those, research reports become final word. Am i right?

For example, IIFL research report says said good monsoon makes "some tractor company" a good bet for investment, but then a good monsoon can make the whole economy buoyant not only tractor company, so on what basis to decide how much money to allocate to tractors? may be housing too will go up and faster than tractor why not housing stocks?

These are many things that keep me puzzled. May be there is something I am missing, may be not fully ready for investing in stocks or may be just do what these reports say. By the way, following IIFL reports for last 1 quarter has really helped me make some profit but is this sustainable. only time will tell or experienced peoples like you.
 
#5
How you guys do that? The only person I can see making money in stock markets are the stock broker themselves cause they have the experience and basically it's their job.
That is not true. I think the statistics are like 5 out of every 100 retail traders do make money consistently. But to be in that top 5%, you have to put in some effort.

On another note, a lot of stock brokers don't actually make much money.

how you guys after managing home and work manage to research the company to invest. I guess it must be either a too much work or with experience you are just able to compare few standard data to see the value in the company?

I am always hearing : you should research before investing? But how? I depend on IIFL research reports as I cannot do research on my own, but if they say buy some shares then how can I reason out whether to buy or not? Because I am depended on these reports are final words in investing. I have heard that some junjun* broker before investing in Titan shares sent his team to speak with the Titan CEOs+ before taking a decision to buy. This is definitely not possible for a retail investor, so I think research reports are dead-end and since we cannot put our own logic on top of those, research reports become final word. Am i right?

For example, IIFL research report says said good monsoon makes "some tractor company" a good bet for investment, but then a good monsoon can make the whole economy buoyant not only tractor company, so on what basis to decide how much money to allocate to tractors? may be housing too will go up and faster than tractor why not housing stocks?

These are many things that keep me puzzled. May be there is something I am missing, may be not fully ready for investing in stocks or may be just do what these reports say. By the way, following IIFL reports for last 1 quarter has really helped me make some profit but is this sustainable. only time will tell or experienced peoples like you.
I spend around 1 hour a day for the markets even if I don't have any position.

Maybe you follow fundamental analysis, there are a few in the forum who follow FA like Alchemist and Prudent_Investor etc.

I follow TA mostly, some Macro data analysis and very little FA.

Whatever it is, determine an edge and use it.

To determine if a stock is worthy of trade takes less than a minute for me. But to determine the risk:reward, the previous behavior of the stock, and to determine entries and exits takes around 2 hours.

It's possible to do your own research but you will have to put in at least one hour a day for that including weekends.

All the material is available online. Learn stuff on the internet and you can do it. Anybody can do it.

Best of luck.
 
#6
More than 99% are fake and just loot your money.
Don't want to mean picking on you, but what do you mean by they are fake?

Do they not possess the skill required or are they dishonest in sharing the outcome of their analysis?

In my opinion, most have the skills 'available to be acquired' and are honest (8/10 times except the cases where they are mandated to liquidate their in-house loosing positions).

I agree with you on that they are not dependable, but then, that is because of their nature of job. Their job is to predict the future.

It's possible to do your own research but you will have to put in at least one hour a day for that including weekends.
Agree with you here, provided that this 'one hr a day' must be preceded by say >5 years of experience of stock market experience.
 
#7
Don't want to mean picking on you, but what do you mean by they are fake ?

Do they not possess the skill required or are they dishonest in sharing the outcome of their analysis ?

In my opinion, most have the skills 'available to be acquired' and are honest (8/10 times except the cases where they are mandated to liquidate their in-house loosing positions).

I agree with you on that they are not dependable, but then, that is because of their nature of job. Their job is to predict the future.
What I meant is that the advisory service fool around.
1) They don't actually produce the returns they show.
2) The way they show their returns has nothing to do with the actual returns the trader gets. For example, some people show "reco price and highest price". That is pretty stupid. I can recommend any stock and the highest price will obviously be higher than the reco price. That doesn't mean anything.
3) They don't account for slippage, brokerage and other miscellaneous costs including fees.

I could go on this way but you get the general idea.

I know that the returns in the market appear in bursts rather than a constant stream. It's the nature of the market. It's not possible to predict the future.

When I said, I aim for 2-4% I meant over a long period of time, lets say each year I aim for 24 to 48%. I admit I have my limitations. I am pretty conservative for a speculator and I only trade options and limit my exposure considerably.

I have seen retail traders who have been consistently making 10-15% each month. They are excellent day traders and have been making that much since years, so it's definitely not fluke and definitely not impossible.

Agree with you here, provided that this 'one hr a day' must be preceded by say >5 years of experience of stock market experience.
The years of experience is really subjective and depends on how quickly you learn the rules of trading. Some people never learn even after decades of experience while others learn it pretty quickly.
 
#8
I have seen retail traders who have been consistently making 10-15% each month. They are excellent day traders and have been making that much since years , so its definitely not fluke and definitely not impossible.
Simple math.

Do you know how much 12% compounded monthly for 10 years amounts to with a starting capital of say 1 lakh? In rupee terms, you wouldn't be able to fit all the digits on a regular calculator and need a exponential notation!

How many billion dollar retail traders have you seen again?
 
#9
Simple math.

Do you know how much 12% compounded monthly for 10 years amounts to with a starting capital of say 1 lakh? In rupee terms, you wouldn't be able to fit all the digits on a regular calculator and need a exponential notation!

How many billion dollar retail traders have you seen again?
It's a common fallacy argument I have heard many times.

I said retail traders. These guys obviously have to live, don't they?

So, lets assume an experienced retail trader is trading with 10L trading capital. On average, he makes 10-15% a month. Obviously it comes in spurts and some months the returns are negative. But on average it comes to around 1L to 1.5L per month on 10L capital.

Basic expenses (varies a lot and depends on each individual). Lets say, 30-40K monthly expenses for living.

Some goes into savings (any experienced trader knows that he should keep a portion of his winnings in safer instruments.) Lets say bonds or FD's which is popular in India. So, around 30-40K goes in that.

Then there are taxes and other expenses. So, 20-30K goes into that.

If you remove all that the guy would probably be able to reinvest his trades to the tune of maybe 4-5%.

But anyone who has been in the market long enough knows that as the account size increases, it gets very difficult to trade without facing a lot of slippage.

So a lot of traders usually have a comfort level and don't really want (nor need) to keep growing their trading account exponentially. They account for inflation each year and grow their capital accordingly .

Yes, we don't see many billion dollar traders but then you don't need a billion dollars.

If he can make even $100K (or maybe Rs 1-1.5L/m inflation adjusted to 2013 for example in Indian terms) he can live comfortably. There are many successful retail traders making 1L or some such figure.

I know the figure of 10-15% sounds preposterous to someone, but its very much possible in trading.

I am obviously not claiming I can make that much but I know of people who have been making that much year in and year out.

For me as a part time trader, 2-4%/m is enough and till now, I'm in the 2-4% mark.
 
#10
If you remove all that the guy would probably be able to reinvest his trades to the tune of maybe 4-5%.
So, again earning 4-5% monthly consistently all his life (after expenses and 5% re-investment), do you know in say 20 years how much will that amount to on a capital of 10L? :D
 
#11
So, again earning 4-5% monthly consistently all his life (after expenses), do you know in say 20 years how much will that amount to on a capital of 10L? :D
But anyone who has been in the market long enough knows that as the account size increases, it gets very difficult to trade without facing a lot of slippage.

So a lot of traders usually have a comfort level and don't really want (nor need) to keep growing their trading account exponentially. They account for inflation each year and grow their capital accordingly .
A lot of people who don't make money trading think no one makes money trading.
 
#13
So a lot of traders usually have a comfort level and don't really want (nor need) to keep growing their trading account exponentially. They account for inflation each year and grow their capital accordingly .
Inflation is 10% a month (oh yeah 5%)? We are living in post-war Germany :) Or at least getting there
 
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#14
So, again earning 4-5% monthly consistently all his life (after expenses and 5% re-investment), do you know in say 20 years how much will that amount to on a capital of 10L? :D
I don't understand the smiley. It's a fabulous return.

And answering your question (taking 4.5% monthly return post expenses & 5% reinvestment)

At the end of 20 years, the corpus would be 16 Lakhs.

In the first year, he will have nearly 5 Lakhs of income (after subtracting the reinvestment) (that's a 50% ROI).

And in the 20th year, he will have nearly 8 Lakhs of income (again after subtracting the reinvestment).

Can you beat that with some other form of investment?

That said, I would imagine that 4-5% of returns would be extremely extremely difficult and very very few people would be managing that consistently.

For me as a part time trader, 2-4%/m is enough and till now, I'm in the 2-4% mark.
2-4%/month would be outstanding if you are able to do it month after month for 20 years (or even 10 years).

I have seen retail traders who have been consistently making 10-15% each month.
I see multiple possibilities

- They are lying
- They are calculating their returns incorrectly
- They are lying
- They are calculating their returns incorrectly
- They have insider information
- They are lying.
 
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#15
2-4%/month would be outstanding if you are able to do it month after month for 20 years (or even 10 years).
Yes, I will admit that I don't have a large track record.

I did not know what a stock market was until Dec 2010.

I think it all started after seeing a Hollywood movie called the Social Network. Eduardo's shares were diluted. I thought what did that mean? what does a share mean and so on. From then, its been a fun ride.

I have been trading since Feb/March of this year. 70% of my trades have been losses but net net, I am profitable.

I think all of trading comes back to having stop losses and letting your profits run. In any case, I'm learning as I go.

I wish I can trade more instruments. For now, I'm stuck with trading the indices. There is no good trend in the indices. I see good opportunities shorting gold and also an awesome uptrend in USD-JPY. The former has no gold options in India and the latter I cannot trade.

Yeah, lets see how it goes. Maybe I'll open an IB account as my account size increases.


I see multiple possibilities

- They are lying
- They are calculating their returns incorrectly
- They are lying
- They are calculating their returns incorrectly
- They have insider information
- They are lying.
They are not lying and they are calculating their returns correctly. Whether you believe it or not is up to you but its the truth. They are normal retail traders day trading index/stock futures, so they cannot have insider information.
 
#16
What I meant is that the advisory service fool around.
1) They don't actually produce the returns they show.
2) The way they show their returns has nothing to do with the actual returns the trader gets. For example, some people show "reco price and highest price". That is pretty stupid. I can recommend any stock and the highest price will obviously be higher than the reco price. That doesn't mean anything.
3) They don't account for slippage, brokerage and other miscellaneous costs including fees.

I could go on this way but you get the general idea.
Got it - if you meant they are dishonest in sharing the result of their recommendations, their past performances.
That is not as concerning as it initially sounded - as if they do not have the skills to make the recommendations in the first place.

Yeah, I have observed this too with my broker. For Prev day's performance, they write "Target 1 Achieved"/"Target 2 Achieved". But some days they simply write "Profit Booked", which is apparently shady.

Coming to the original point of the thread -
In my opinion, referring to the recommendations out there is not a bad idea. Those recommendations where they provide the reasoning behind them as well.
Like below Stock recommendation for the day | Business Line
These can serve as good reference for learning/trading - again reference only.

One needs to learn the tricks of trading starting with Technical Analysis, gain some experience and must be able to take a position and decide on those positions by oneself.

One has to be fully equipped to be successful in the market and can not rely on others to serve you the success.

I do not trade often, have done in past and have been doing some recently. I have lost on balance. But I believe and I am getting better at it.

I realized that every time I enter the market I am playing with full time professionals. There's vultures out there.

I need to be with them and like them every moment, my loosing positions must have been the ones which went against them.
 
#17
I see multiple possibilities
- They are lying
- They are calculating their returns incorrectly
- They have insider information
.
Too much fuss around it :) I assume you have much more experience in trading than me to back your suspicion.

With my limited experience, I do not find 10-15% a month or something like that completely unimaginable or unattainable. I do buy these figures.

Of course for those who achieve this - trading is not a part-time-money-making hobby like it has been for me. It is a serious objective-driven business.
 
#20
Compounding is the secret to creating serious wealth. If the invested corpus remains the same 2% or 5% or 15% doesn't matter much. A person earning 10% return with X amount invested and another earning 5% with 2X will in the same boat and continue to be even though one is doing twice as well the other. This way trading however well done would be like any other job.
 
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