Market Activity


The Middle Ground

Market Activity

The Middle Ground

At one end we have the old world; the one that everyone knows and the one that anyone born before the new millennia, grew up with.

October 15, 2021

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We live in a world where extremes make the most noise and get heard, but extremes are rarely the right place to be.

The world of investments is no different.

At one end we have the old world; the one that everyone knows and the one that anyone born before the new millennia, grew up with.

This is the investment world where you meet your wealth manager, you agree with everything they say, and you transfer over your savings to ‘grow’. What happens to it after that? You’ll get an update every six months, but it will say pretty much the same thing as everyone else’s.

There isn’t anything very interesting they can do with the money, and most of them are bound by the same model which allocates the capital into various assets. Your Asset Allocation will look something like this:

Cash: this is a completely pointless thing for them to hold. You’d be better off just putting it in national savings. The return, if any, will be less than 0.5%.

Government Bonds: These currently yield very little but are safe, so many investment portfolios, particularly pension funds, have to include them. The fact is, some government bonds such as the French and German 5-year, are actually negative yielding at the moment. They currently return -0.4% and -0.49% respectively. This means that if you buy one, hold it for 5 years until it expires, your total return would be negative. You are essentially guaranteed to lose money.

The UK 5-year government bond is a slightly better purchase as its current rate of return is 0.75%. This is pretty small, but at least it’s positive and your portfolio is finally making some money; or is it?

At this point, it’s worth bearing in mind that you are paying these people between 1% and 2% to place these investments for you. Sadly, this means we’re back to square one, and you are still down money and we have probably already accounted for about 15% of your portfolio.

If you think there is no way you could possibly be holding any of these in your portfolio, please ask your IFA or Investment Manager and let us know what they say. We’d love to hear about that exchange of words.

If you hold anything with a return of less than 2% with them, you are doing worse than if you’d just hidden the money under your bed. Still, they are getting paid, the regulators are happy as it’s all by the book and perfectly safe, so the financial world will continue to sleep at night.

The other things you hold in there will be the ones that are actually making you money. Corporate bonds, although by their very nature, the higher the yield, the less likely you are to get it back.

Commodities: these are incredibly volatile and most people, including your investment manager, have absolutely no idea which way they’ll go. You might hold some gold, as it’s also considered a ‘safe haven’ asset, but that has returned -7.3% so far this year so I hope you don’t.

Their argument for holding gold would be that if equities go down, gold should go up, therefore it is a hedge. However, this also works the other way round. If equities go up, gold will probably go down. Therefore, all you're doing, is reducing your exposure to the original asset, and it would be a lot cheaper just to buy fewer equities but get the same result.

To simplify, rather than spend £100 on equities and £50 on gold, just spend £50 on equities and make (or lose) the same amount. That would leave you £100 to invest somewhere else. Please bear in mind we chose these numbers for simplicity 😊

The reason this works for them, remember, these people are paid via a management fee which is a percentage of your assets held with them. Therefore, the more money in the account the better. As we have always said, they don’t care about making you money, they just want your money.

Now onto the other extreme. The new world of people trading for themselves or going onto social trading platforms such as eToro. There you will pay very little, but be promised a lot. Copytrade their current ‘trending’ trader, who may have no experience but got lucky last month and made 200%.

They won’t even charge you for this. It’s all free, you just have to open the account on their own brokerage site.

Their average account size is less than £1,000 and 68% of accounts lose money. All the information you need to make the informed decision that this is a very bad idea, is right there in front of you. Yet they have over 23,000,000 accounts held on their platform.

First of all, nothing is free. If it were free how would eToro have a recorded turnover of over $600,000,000 in 2020? It isn’t free. They take money off you every single time you trade, you just don’t know it.

They are luring people in via adverts at football matches alongside the betting companies, as they are appealing to the exact same market audience as the likes of Bet365. They haven’t got their hands on Ray Winstone yet but surely, it’s only a matter of time.

They aren’t trying to hide it either. Their market audience, are the gamblers, the dreamers. Tell them there’s a chance they’ll make 200% in a month and they’ll give it a go. The sad truth is, it won’t work, and they will lose their money. In fact, by our maths, eToro are helping 15,640,000 lose money every day.

As traders ourselves, with decades of experience at various institutions, we can tell you, if you’re making 200% a month, it’s not a system, it’s a coin toss. If it were possible to make this on a regular basis, investment banks would be snapping up eToro traders left right and centre and paying them a fortune; but they aren’t, and with good reason. Up 200%, can easily be down 100%, and that means your portfolio is worth £0.

They aren’t, because it isn’t real. They can’t promise these returns. Professional institutional traders are looking to beat the market by 3 or 4 times. If they do, they have a job for life. This is equal to about 20% a year ROI which any hedge fund would be happy with.

They use clever software which links your broker account (held at eToro of course 😊), to that of a trader. This should be changing the investment market. Being able to trade, without actually having to learn how. Simply link it to someone who knows what they’re doing. The problem is, their traders don’t always know what they’re doing as they aren’t heavily vetted like they are at The Portfolio Platform.

On top of bad traders, there are so many to choose from, and most investors don’t understand how to read risk v reward from trading statistics.

If presented with stats such as last months performance, would you go for the steady trader who makes 4% a month, or do you choose the one who made 200%? Sadly, most investors would go for the 200%, as they don’t understand what they are looking at. Taking excessive risk is a very fast way to end up with nothing. This is also why eToro itself, admits 68% of their accounts lose money.

Why would anyone use a site that tells you up front, that 68% of their customers lose money??

So, what is in the middle. It seems like a vast cavern of opportunity in-between: the old-fashioned portfolio, which has so many boxes to tick there is no possible way of actually making the investor any money; and the gambling broker platforms that the millennials are all signing up to without a thought or care.

Attitudes towards risk have change, and the investment world needs to change with it. Sadly, opportunists are advertising to those who want fast returns, and it’s working. They are taking their money off them with a business model that isn’t rewarded by performance, it just rewards the brokers who host the accounts.

This is what we saw at The Portfolio Platform. A huge gap in-between two markets that needed to be filled, so this is what we did.

We have found professional traders, and we have built our own platform for investors to use. We have personally vetted the traders to make sure they have the experience and the performance record to showcase their trading strategies.

We won’t accept traders who make 200% in a month, because it’s not a game and we don’t want the risks to outweigh the rewards. We want traders who will perform on a regular basis, beating the market, and helping investors increase their return on investment.

We have made it so that you can build the equivalent of your own hedge fund, and actually watch it trade. Our portfolios are here to replace the old world’s. We have no entrance fees, or exit fees, or management fees, we don’t even have any performance fees.

The only fee we charge is a subscription. We have found this gives the best result for everyone. The traders are paid by subscription, and not a percentage of performance. This means they won’t take excessive risk, as there is no extra reward. If they perform solidly, as we ask, they will get more subscribers, and this will subsequently increase their monthly income.

Nearly all the biggest trade losses in history, were because the trader was on a performance-based bonus. Take that out of the equation, and it takes away one of the costliest emotions in trading: greed.

At The Portfolio Platform, we have built the answer to the future of investing. The best of new world trading, available to anyone. Don’t invest in equities yourself, invest in those who have been doing the job for decades, and let them trade for you from as little as £75/month.

In 2020, the average return from a Portfolio Platform strategy was 58.8%. Just click here to have a look at what our investors are saying about us.

If you would like more information, please do not hesitate to contact us and one of our traders or directors will be in touch to discuss a bespoke portfolio that is best suited to you. You are the investor, it’s your capital, shouldn’t you have a say in what happens to it?

If you wish to book a call and speak to a member of the strategy selection committee, please click here.

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