Do financial experts really help you to take an informed decision?

ABC* is on a roll since the beginning of the second quarter of the current fiscal year. The stock witnessed sharp volatility in the last few days, though it gave up most of its gains. Technically, the stock is showing signs of good movement in the short term, but I think with a long term perspective, there are better bets available in the market.

I thought I understood that. But did I? Please help me what did the "expert" mean by those simple sentences. Let me try to deconstruct those simple lines.....

1. On a roll: I think this stock is rocking, buy!
2. since the beginning of the second quarter of the current fiscal year: Oh, it is a recent phenomena and what happened before that, we don't know. Doubt!
3. sharp volatility: looks scary.
4. gave up most of its gains: Bad, I have to rethink whether the stock is rocking!
5. showing signs of good movement: Good, after all it's a Buy recommendation after all.
6. with a long term, there are better bets: Doubt again about the stock.

The expert has done his job. He has told me nothing and still is called an "expert". Moreover the leading daily also warns you that they are not responsible for your decisions.

There is a bigger issue of the subprime mess. Is there some accountability for the top dogs of financial services industry, the highly rated experts, who are responsible for the crisis?

*ABC is a stock which is real and the recommendation as above is verbatim.

What they teach you is to "Take responsibility for your own financial decisions"

India's first online weekly onpersonal finance

Comparison Chart of ETFs in India

The Scott Adams unified theory says that invest 70% of your money in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement. Let's check out some important data on expenses and return for the ETFs available in India

ETF Report as on November 24, 2007
Scheme Name	NAV (23-Nov-2007)	Expense Ratio (30-09-07)	Simple Annualised Return (%)
			1 Year	3 Years	Since Inception
Bank BeES	899.50	0.55	44.5	69.2	72.9
Gold BeES	1043.49	1	--	--	14.5
ICICI SENSEX Prudential ETF	192.92	0.8	37.4	71.2	97.4
Junior BeES	111.39	1	54.8	63.1	110.2
Kotak Gold ETF	1046.57	--	--	--	53.1
Liquid BeES	1000.00	0.7	0.0	0.0	0.0
Nifty BeES	567.06	0.8	40.8	64.5	75.0
PSU Bank BeES	293.74	--	--	--	34522.1
Reliance Gold ETF - Dividend	1039.70	--	--	--	15590.5
Reliance Gold ETF - Growth	--	--	--	--	--
UTI's SUNDER	575.53	0.5	43.5	66.3	108.5
UTI Gold ETF	1045.28	--	--	--	6.6
Indices
S&P Nifty	5608.60		42.1	64.9
BSE Sensex	18852.87		37.7	70.8
Crisil Liquid Fund Index	1348.40		7.3	6.3
BSE PSU	9502.09		51.2	48.2
CNX Nifty Junior	10949.10		55.0	62.5

Source and thanks to Sunita Pawar, Customer Care Manager, Bench Mark Mutual Funds for the immediate response to our email

The Real Story of Expert Fund Managers and Advisors

Here is a profile of a successful American Stock Broker

Some excerpts, but you must see the full article

For Blaine Lourd, the mere fact that he landed in the middle of this industry and became a success was reason enough to hate himself.

Blaine twisted himself into ever more intricate knots to disguise his inability to pick winning stocks or money managers, his antithesis was rising.

............. founded in 1981 on a simple idea: Nobody knows. Nobody knows which stock is going to go up. Nobody knows what the market as a whole is going to do, not even Warren Buffett. A handful of people with amazing track records isn’t evidence that people can game the market. Nobody knows which company will prove a good long-term investment.

Even Buffett’s genius lies more in running businesses than in picking stocks. But in the investing world, that is ignored. Wall Street, with its army of brokers, analysts, and advisers funneling trillions of dollars into mutual funds, hedge funds, and private equity funds, is an elaborate fraud.

Got the link from Ajay Shah's Blog
India's first online weekly onpersonal finance

What are the different charges of a ULIP?

Unit linked Insurance Plans (ULIP) provide the twin benefit of providing the benefits of investing in the stock market and covering your risks. It is important to understand that a Unit Linked Life Insurance product is different from the traditional insurance products and are subject to the risk factors.

The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions.

Other than the fact that the investment risk in investment portfolio is borne by the policyholder, let us take a look at the different charges in a ULIP.

Particulars	LIC	ICICI Pru	HDFC Standard	Bajaj Allianz
Plan name	Profit Plus	Lifetime Gold	HDFC Unit link	UnitGain Plus Gold
Premium allocation	24%	20%	70%	25%
Mortality Charges (/1000 )	1.80 for age 35	1.46 for age 30	NA	1.74 for age 30
Fund Management Charges	0.75% for Bond 1.50% for growth	0.75 % for preserver to 2.25% for multiplier	0.80%	0.95% for Bond, 1.75 % for growth
Policy Charges	Rs 60 per month in first year, Rs 20 after that.	No other charges, but FMC can be raised to 3.5%	Rs 20 per month for administration	Rs 600 per annum inflating at 5% per annum
Switching charges	4 free, Rs 100 after four	4 free, Rs 100 after four	24 in a year free, Rs 100 after that.	3 free, Rs 100 after that
Miscellaneous charges	Rs 50 for alteration	Switching can increase to Rs 200	Charges for revival, withdrawal, etc at Rs 250 per request.	Rs 100 per transaction for revival, etc

There are a few parameters like the flexibility of premium paying term, the amount of cover available for disability, illness and accident which has a wider variation among the Insurers.

I dislike the heavy premium allocation being charged. Out of the Rs 100 you pay to your Insurer, only Rs 70 odd goes to your investments (Rs30 in case of HDFC!!)

India's first online weekly onpersonal finance

What factors to look for in a Mutual Fund scheme?

There are more than 700 odd Mutual fund schemes in India. What should be the other factors to look for in a Mutual Fund scheme before you sign the cheque and hand over to your MF Advisor?

This table could be a starting point

Top ten Mutual Funds on a 5 year return basis

Top Mutual Fund schemes in Equity Diversified category based on 5 year returns as on 20^th November, 2007

Scheme Name	Launch date	5 year return (%)
Reliance Growth	Oct 07, 1995	72.57
Magnum Contra	Jul 03, 1999	71.08
Magnum Global	Sep 22, 1994	69.66
Sundaram BNP Paribas Select Midcap	Jul 19, 2002	68.93
Magnum Multiplier Plus	Feb 20, 1993	64.97
Birla Sun Life Equity	Aug 27, 1998	64.63
Taurus Starshare	Jan 29, 1994	64.29
DSPML Equity Fund	Apr 15, 1997	63.60
Birla Sun Life Basic Industries	Jan 15, 2000	62.22
Reliance Vision	Oct 07, 1995	61.68
DSPML Opportunities	Apr 10, 2000	61.08

Source: ValueResearchOnline