There’s a new movie about Wall Street. “Money Monster” is a fictional production about Lee Gates, supposedly as stock market guru, who announces his picks on a television show. During one of these shows, an angry investor storms the studio and takes Gates hostage.
How good are tips? Many are worthless. Yet investors continue to follow the so-called gurus, often losing much of their investments. When it comes to active trading, more than 90% of amateur traders lose money.
According to Brad Reifler, CEO of Forefront Capital according to About.me, identifies that there are three big issues that small investors face. First of all, there are fees, and these are often high. At this point, investors even question mutual fund investing as often these vehicle fail to beat the market while charging high fees.
The second issue relates to access to investments. Many potentially lucrative investments involve alternative investments such as hedge funds and private equity investing.
The third problem, which also relates to the previous ones, comes from investing in the stock market. Investors can diversify by buying different stocks, but these investments are correlated. If the market declines on a larger scale, most stocks follow. This is often not the case with alternative investments such as those involving funds that bet on market declines to offset the risk.
In response, Brad Reifler is starting a fund which focuses on alternative investments and requires a much smaller investment. What’s more, investors will not be charged a fee until the fund earns 8% return. Brad Reifler’s new fund is also covered on MarketWired.