A “No Brainer”

So called financial experts tend to agree on one principle that retail investors are best served leaving their financial investments to the experts (Passive Investing) as these decisions are far too complex for the average individual investor to understand !!. Where the reality is there has never been a better time in the history of man for the individual investor to participate in what is the fairest, true and open market in the world the US stock market. Thanks to the internet and the technical revolution the retail investor is now equipped with all the knowledge and tools so he can now compete on an equal level with the institutional financial experts as like never before.

One could argue the scales have tipped in the retailer’s advantage,

• Smaller scales so much more nimble.
• Exposure, choosing size and participation (fund managers are reluctant to go to cash in fear of missing out and are often judged on their trading volumes).
• Selection of products (not having to participate in certain sectors or indexes because of fund prospectus).
• Smaller orders leading to better and quicker fills.
• Smaller portfolios with fewer positions easier and quicker to adjust.
• The freedom of choosing market direction (many fund managers have their hands tied and must maintain a positive delta portfolio).

The Maths

I’m feeling bullish on Tripadvisor (TRIP) and I want to initiate a long position so instead of buying 100 shares at $60.81 I decide to sell one September 17th 2016 (42 days) $60.00 put for a credit of $2.05. Should the stock be below $60.00 on expiration of the option then I will be put the stock at $60.00 so my cost basses will be reduced to $57.95. On the other hand should my bullish instincts be correct the stock closes above $60.00 then the put expires worthless and I keep the $2.05 earning 29.64% APR (Annual Percentage Rate) return on my investment (My investment being the maximum risk $57.95). This is a win win scenario that anybody with a basic education can do against common believe you don't need to be a seasoned fund manager to use strategies like these to make sustainable returns.

News Travels Fast

One would have to think that the word is already out in the street as more and more we see in the headlines “Hedge Funds Are Closing At A Fast Clip” Barron’s article March 21 2016, “How hedge-fund geniuses got beaten by monkeys — again” Market Watch article June 25, 2015, “Funds of Hedge Funds Shrink by 11% as Losses Spur Redemptions” Bloomberg article July 15, 2016.

Conclusion

The unprecedented quantitative easing has and will continue to force individual investors to take action and become active investors seeking alternatives out of necessity, this can only be a positive for society empowering individuals to take charge of their own destiny. All of this has been the primary inspiration for starting this Pooled Investment Club and once the results for the maiden evaluation year "Pooled Fund (2016 URS)" are published on this site on the 31th december 2016, it will be apparent why active investing is a “No Brainer”.

The Manager, Fidelibus Lucrum, Pooled Investment Club.
07 August 2016. 11.15 Eastern.