_Conflict of Interest_ - a highly debated issue, especially in the financial services industry.

I recently picked a copy of an 'Indian Mutual Fund' magazine which has been in existence for over 2 decades. Tonnes of gyan coming out in every issue from the editor & his team on how to invest, where to invest, random thoughts on regulatory & compliance issues, how should advisors work, what to avoid, what should be the compensation structures etc...+ the *Star Rankings* based on an, in house rating mechanism 🙂

Out of curiosity, I started counting the # of advertisements in this issue & with a particular interest on, 'who' are their revenue cash cows 🤔

Data points - 

142 pages - Issue size
30 pages - Full Page Ads 😳
Of which,

23 Full Page Ads are from various Mutual Fund Companies (there are 44 of them in the industry).

7 Full Page Ads are from Housing Finance, Banks & Insurance companies.

That's makes 22% of the magazine content is ads 😳....16% of the 'total pages' are ads from various Mutual Fund companies which probably??? *pay* the magazine.

By the statistics, *76%* of the *total ad pages* are from the mutual fund companies 😳😳

Is there a credibility in the magazine's content ? 

Yes, there can be, if the entire *content* is completely unbiased & consistent in approach. Be it, with the categorisation of the schemes, ranking the schemes, ideation of the industry issues, erratic thought processes of the content contributors etc...

Bottomline, 'there can be revenue streams with a *positive conflict of interest*, meaning, _everyone benefits, without short changing one another_.

But, I suppose that is an *ideal efficient stream of bliss*, which the majority 'service providers & takers' miss by a large margin. 

*A few good men / women, are indeed few*

"Gambling Disease kills One Australian a day, But it's too lucrative to cure" - Bloomberg

Australians lose most money to gambling per capita each year...$761. Followed by Hong Kong ($570), Finland ($360), Italy ($325) & Canada ($325).

& & &

Australia has never seen a recession in the last 25 years.

Well, data scientists might explore at Co- relating, "Per Capita of Gambling" to "# of recessions in a decade" 😳

Bottom line, Gambling has got nothing to do with an Australian Recession, but it fills $ 4.4 Billion as Government Revenue 🤔

Gambling in Machines = Speculating in Stock markets

Both behaviors trigger the same neural wires in our brain. It might be for just one shot in the slot machine or continuous slots (buy, sell, buy, sell etc...) in the stock market. Both are the same.

Avoid, Speculative Gambling

Indulge in, Peaceful Investing

"It is true that Fear is the root cause of degradation & sin. It is fear that brings misery, fear that brings death, fear that breeds evil. And what causes fear? *Ignorance of own nature* - Swami Vivekananda

It is true that -

Fear is the sure cause of Portfolio Degradation.

Fear is that brings Portfolio Misery.

Fear is that brings one's Portfolio Death.

Fear is that breeds Portfolio Churning, especially at the most inappropriate times.

And what causes *Fear*?

IGNORANCE OF OUR OWN BEHAVIOR & RISK TOLERANCE LEVELS

Sometimes, this is what too much data & number crunching can lead to...or should I say, 'Most times'.

Decision Making - "a thought process of selecting a logical choice from the available options" 🙂.

Good description, but; Do we always have choices to make decisions? Do we always behave with all the logic? With all the logic, choices & rationality, do we always make the 'appropriate decisions'?

I don't know :( but, one thing is for sure in 'Decision Making'..."More often than not, the *Cost of Delay* in Not taking a decision & actioning it, leads to quite a disaster vs making a right or a wrong decision".

'Cost' of Delay = 'Time & Value' Decay.

Bloomberg - Harvard Does a Trade You Should Never Make http://bv.ms/2dguaQ4

Harvard, a Country, a State, a Corporation or an Individual...All think the same way :)

Reasonable Expenses are not the only criterion for delivery. Harvard listened to its Endowment fund donors & has now paid a *super heavy price* (in performance), for a decision which was *Million Wise & Billion Foolish*

Expenses matter, but there are things that matter even more.

When erratic *Greed based Constructions* happen in a city, in the garb of development, there is no need to blame the Rain Gods.

When *Need Based Portfolio Construction* happens, we need not worry about Low Pressures, Rains & High Speed Winds in the  Capital Markets.

(Hyderabad's state, today – Floods everywhere due to incessant rains)

How does 'Risk' hit us?

Michael Schumacher - 7 time Formula1 champion & probably the greatest in the sport is still recovering from an accident which happened 3 years ago. He is now as good as a vegetable; maybe in a condition termed ‘medical coma' 😟. Hold on, he did not get injured while driving the F1 car. He got into an accident while 'Skiing' with his family 😟. Isn't it an irony; we all perceived that, he had a very high 'Risk' of getting injured during a race 🙂.

But, 'Risk' hit him very hard from a direction no one could ever imagine. 'THIS IS CALLED RISK'. It hits one from an unprepared, unplanned & unimagined - time, place & degree.

So, what can we do? Definitely, 'Be Prepared' (financially or otherwise) for all Risks we can possibly think of. Accept the 'Reality of (Money) Life'....It can only do 'so much'.

Leave probabilities to statisticians. They are too good at #s, but are also as bad as a Weatherman in predicting the possible 'direction of risk'.

Be Prepared. Accept Reality.

One of the biggest challenges I find people facing today is, identifying "genuine good people". Trust, Character & Personality are rare commodities. Integrity & Honesty??? Each one's 'Self Interest' precedes others 'Good' in monetary and other parameters. Doctors, Lawyers, Bankers, Advisers, Real Estate dealers, Friends, Relatives...it’s all the same.

But once we can identify someone who genuinely feels & wishes for other people's good; it’s not a great idea to lose them, for whatever reason. A good Portfolio or a good Person, once identified; if we don't stick with them - the end result is definitely not favorable (especially, when one considers a few pennies more or less). Anything can be bought for a price (less or more), but not; "Trust, Integrity and an Absolute Well Wishing Attitude" 🙂

Identify good People & Portfolio. Stick with them for long 😀

Mutual Funds – Value Creation

13 April 2015 to 8 Sep 2016 – BSE Sensex performance is 0%

Compare this to some top quartile mutual funds’ schemes. I’ve taken the NAV (Net Asset Value) of a scheme on the same days as mentioned above; but, the returns are not 0%.

Large cap, Mid / Small Cap, Multi-cap or Balanced – all categories of schemes delivered…except the BSE Sensex.

Should we look at the Index value & Invest into Mutual Funds?