how to underperform the market and get paid like a rock star

How to Underperform

the Market and Get Paid

Like a Rock Star

Would you like to receive monster-sizedchecks, drive a different car for every day ofthe week and own multiple estates acrossthe globe; all while underperforming themarket?

I know…I know…sounds too good to be true,right?

But it isn’t. You see, a small fraternity calledfund managers can actually afford to live thisway. Best of all, you help fund their lavishlifestyle.

Doesn’t sound fair, does it?

Well, without your support it wouldn’t bepossible. They live in the lap of luxury, raking in(your) money from (their underserved) fees.

It’s no secret; most mutual funds and hedgefunds underperform the market. In fact,according to a study conducted by MotleyFool in 2013, only ten of ten thousand activelymanaged mutual funds were able to beat theS&P 500 consistently over the past decade.

Now, I’m no mathematician, but it seems likethe odds of finding a top-notch moneymanager… is just as good as having a perfectMarch Madness bracket. OK, maybe it’s alittle better, but I think you get the picture.

Year after year, these funds printmoney…well, not really…they just take yours.

Here’s what they’re all about:

First, everything is relative in this business. Agood or bad year is determined by how a fundperforms relative to its benchmark, in manycases, it’s the S&P 500 index.

According to SPIVA (S&P Indices Versus ActiveFunds), in 2013, 56% of large-company fundsand 68% of small-company funds failed to beattheir benchmarks. Year after year, it’s the sameold song and dance.

Check out this chart taken fromthe SPIVA( US YEAR-END 2013 REPORT), thefull report can be downloaded at:

http://us.spindices.com/resource-center/thought-leadership/spiva/

Now, a fund can have an “up” year; however,it’s all relative. For example, if the “market”is up 20% and the fund is up 10%, the fund isunderperforming. However, they can alwaysadvertise their performance in a positiveway.

On the other hand, if the “market” is down10%… and the fund is down 8%, the fund isoutperforming. Again, this can be twistedinto being a positive.

What if the majority of funds do poorly?

Well in that case, they can comparethemselves to their peers, not thebenchmark.

As you can see, everything can be spun into apositive. They are graded on acurve…unfortunately, the real-world doesn’twork that way.

Bottom line, if you simply bought a product thatresembled the S&P 500 index, you’d beat themajority of mutual funds out there. I know, itsounds crazy, but it’s true.

You’d think with all those advanced degrees in aroom, an army of analysts at their disposal andcountless hours of research, that these fundswould have an edge.

I know it seems unbelievable but facts are facts!

But it gets worse.

The average mutual fund will charge you around1.25% – 2.5% in fees, this covers themanagement fee, administrative costs,marketing and advertising fees.

That’s right folks… next time you see yourmutual fund featured in a TV commercial, makesure to brag to all your friends, because it wasyour money that helped pay for the spot.

Also, keep in mind that transaction costs fromtrading are not included in the “expense ratio.”Not only that, but some funds will even charge aloading fee (aka the f**k you fee).

This fee rewards the stockbroker whorecommended the mutual fund to you; after all,they have to get in on the piece of the action.Why would they recommend something to youif there wasn’t anything for them to gain?

Now, when you join a health club, you pay amembership, in return you have access totheir equipment and the tools needed to getin shape.

When you sign up for a mutual fund, you arecharged a fee to pay the manager and theirstaff, in return, you’re promised nothingback.

In other words, your hard earned moneygoes towards feeding their lavish lifestyles.The game is simple, the more moneyinvested in the fund, the more money theymake in fees.

Of course, this requires marketing andsalesmanship to get the job done.

Nevertheless, everything is devised to soundsophisticated and necessary. I know, becauseI was once on their side. Working as astockbroker, I learned first-hand that a lot ofthis business was simply founded on good ol’fashioned sales and marketing.

Believe me; it didn’t take long for me to cutties with this dark side of the biz.

At the end of the day, the majority of thesefunds offer the sizzle but not the steak.Ironically, having your money invested inthese funds give off the impression thatyou’re responsible and smart.

After all, you’re delegating duties to“professionals” who know their stuff. Butlet’s face it, we know this isn’t true. Theyunderperform while nickel and diming you infees.

So what gives?

The majority of investors are scared to takeon the responsibility of taking financialmatters into their own hands. If their moneymanger underperforms, they can use themas a scapegoat.

However, if they take control… it’s all onthem. Of course, this can be veryintimidating at first.

But you know what?

No one is going to care more about your moneythan you. A money manager is going to get paidno matter what.

Ultimately, their goal isn’t outperforming themarket; it’s to stay level with their peers (othermoney managers). As long as they can addAUM (assets under management) and collectfees, they are doing their job…AKA well forthemselves.

How About Hedge Funds?

Sadly, hedge funds are even bigger fee vacuums.In Sinon Lack’s book, The Hedge FundMirage, he offered some incredible statisticspertaining to hedge fund performance and fees.

For example, from 1998 to 2010, hedge fundmanagers earned $370 billion in fees. However,their investors earned a whopping $70 billion ininvestment returns.

In the summer of 2013, BloombergBusinessweek, wrote a piece titled: HedgeFunds Are for Suckers, debunking the myththat hedge fund market wizards consistentlyoutperform the market.

As mentioned earlier, this isn’t breakingnews…it’s been well documented for years.

Advantages You Have:

1) Mutual funds are generally fully investedat all times; they are competing againsttheir peers, not the market.

On the other hand, you have nocompetition. With that said, you don’thave to be invested all the time.

Often times, being in cash, is the best marketposition for you to be in, but not for themsince their business model is to invest yourmoney so they can get paid.

In addition, you can be more selective withyour investment decisions.

2) Using options to generate betteropportunities and success. The probability ofa stock price rising is 50/50; however, withoptions you can structure positions that skewthe odds more in your favor.

In addition, options are leveraged, meaningyou can use less capital to achieve betterreturns. Not only that, structured optionstrategies allow you to define your risk andhedge core investment positions.

Best of all, you don’t need a specific marketcondition in order to invest with options. Infact, they can be used during periods of highor low volatility, bull and bear markets…aswell as choppy and sideways markets.

Now, do you want to delegate your financesto funds, which underperform and hammeryou with undeserved fees? Of course, it’sgoing to take some courage on your side toend this vicious cycle.

For years, I’ve helped investors take thismonumental step, showing them methodsand strategies that could potentially leadthem to financial freedom.

I understand that not everyone has the sametime to devote to their investments.

That’s why I’ve created specific courses forinvestors who are strapped for time. I believethrough the right investor education, you’llgain enough confidence to take control ofyour financial future.

That’s why I frequently send out emails tosubscribers that highlight: tradingopportunities, timely market analysis, freereports, video lessons and much more.

In addition, I’m always available to answerquestions via Facebook or Twitter…you caneven email me directly.

In the end, I’d like to maintain a lively andactive community, where we all learn fromeach other. After all, these funds aren’thelping our cause.

Now, I’d love to hear your thoughts on howwe can stop these fee thirsty funds and theirshenanigans, in the comments section below.

Also, make sure to sign up to receive mymega-valuable emails about investing andthe financial markets. In addition, I’ll sendyou my latest free report.