The Role of an Advisor

Hi Friend,

Advisory is a tough job for many reasons. Some of them are,

• Intangible and hence the receiver may not appreciate its value fully

• The results can be seen only over a period of time 

• The success of advice depends also on the effectiveness with which it is implemented, which isn’t in the control of an advisor

• Good advice, like many other good things, may be boring.

 

The following Extract from the semi-annual report for the year 2016 provided by JMX capital GMBH for the sub fund truffle, summarises the role of an advisor , 

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• Since TGV Tuffle was fully invested shortly after its launch and there have been no significant changes within the portfolio, I am often asked what I am doing all day? 

• What more is there to do when all shares are purchased, and all capital is invested ?

• Generally speaking traditional standards of productivity don't apply to my work day.

• In most occupations, the traditional definition of a productive workday can be measured by how much output was produced. 

• A sales person sells products, a doctor treats patients, and a lawyer writes legal opinions.

• In all these cases, even an outside observer can get a clear impression of how much work has been done in the respective profession. 

• In my profession, however, nearly everything revolves around questioning the original hypotheses behind investment decisions and continuously collecting information that contests these theories.

• For me, it is a good workday if I can dispel an investment idea of the past, or have found a creative way to pit one of my key assumptions against reality.

• During one of his legendary general meetings Warren Buffett was asked whether his success need to be put in to perspective, since it is essentially based on only a few major investment decisions (which, however, could have been mistakes). 

• Buffett replied that every day he is holding a share, he is making an active decision not to sell it.

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“If you can get good at destroying your own wrong ideas, that is a great gift” - Charlie Munger

Precisely this is what an advisor’s role is for an investor, helping an investor destroy his / her own wrong ideas. 

Fund selection and other aspects form a minor role in a successful advisory.

Thank you.

Source: http://goo.gl/QOGECj