Productivity Profiles - The Financial Guru

By Hans Bool
When there is more fear in the market, (private) investors are more in search for opinions about what they should do. The financial Guru may offer "help."
A Financial Guru is producer of opinions.
Most gurus are stable in their opinions, but as the market outlook changes, different gurus are selected by the financial media. Now that we have faced a decline of about 20% the bear-market gurus show up and the optimists are silent. Every gurus has its specialty and a background with often a bias for skeptism or optimism.

Some have a fundamental view on the economy and on the exchange, others use a pure technical view. These are more flexible and may change their opinion according to the charts.
Every investor will know from experience however that none of these gurus knows what will happen in the near future. They are dealers in expectations and promises.

Recently I followed one of the gurus and realized the ease in which he advised a set of new transactions. The stocks went down for a few days or weeks even and he advised to "liquidate the stocks, and to buy long call options on these stock ("which required fewer investments"). In addition he claimed to sell put-options to gain some extra; the premiums of these have raised as the volatility increased over the last days...
He didn't mention however that the risk of this portfolio would automatically increase. By selling the stock and changing the money holding for long term calls, the collateral diminishes and the margin requirements may become a risk when the stocks will fall further...

Without going in too much details. The (productivity) of the guru is focused on production of opinions. Compare this to a manufacturer that doesn't have direct client contact; I can't tell who its customers are.
The art of the private investor is to follow those opinions (gurus) that match its own financial preference.
H.J.B.
© Hans Bool
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