Investors Can’t Let ‘Experts’ Make Call

Are there really any experts in finance or economics, or is expertise just a claim too often made?

The question is provoked by a brokerage house mailing to the media urging them to call “one of our experts” for, it is presumed, the final, reliable, correct answer to those nagging questions that beset investors.

But then comes another advisory, this one from Mark Hulbert, publisher of the “Financial Digest,” which tracks the record of investment letters, which we are generally told (by the publishers) are edited by experts.

Hulbert, who has been tracking the records of 20 of these letters for the past 17 years, has found only three that have beaten the market: Value Line Investment Survey, The Prudent Speculator and the Chartist.

It is not difficult to figure out why: When dealing with the future, an investment adviser or other alleged expert has very little special knowledge. In short, they know no more than you or I.

Pro-Futures Capital Management, an Austin, Texas, firm, has scoured the company for investment advisers it can recommend to its clients. They’ve been at it for years. So far, they’ve found six they can recommend.

Just six might not seem to be an extraordinarily small number until you match it against all the thousands of folks out there who are registered investment advisers or picking stocks for mutual funds.

You would, of course, expect the performance of mutual fund managers to exceed that of the marketplace in general, and you can be convinced of it by their frequent appearances on TV. But few consistently do so.

The simple truth is that there are very few - if any - authorities on what specifically is going to happen in the stock market, or the economy.

The message is clear: You, the small investor, are on your own. You alone are responsible for your investments, no matter how hard you try to pass off that responsibility on the experts, of which there are none.

If you still think there are, put them in a room, stand outside the door and listen to the noise. Experts, you would think, might agree with each other and express themselves with certainty.

But that noise you hear is either.