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Rocket Fuel For Your Portfolio


I sometimes wish I was better at complaining. I put myself around a “6”, on a scale of one to 10.

But some people are an “11”. They are very good it. They really are.

I was at a restaurant the other day when a couple of diners at the next table encountered one problem after another with their food order.

Wrong tea

Firstly, the waiter brought them the wrong pot of tea. They got a pot of jasmine tea rather than the pu-erh tea that they ordered. That was put right – but not without a palaver from the waiter.

Next they were informed that the restaurant had run out of the Oriental Salad that they had ordered. Hardly a disaster, you might think. Restaurants do run out of items on the menu. It can happen. But wait…

…then while other diners were being served – including the last portion of Oriental Salad – the couple’s table was bare, even though they were there long before other diners.

Last laugh

Things came to a head when the restaurant manager laughed off their complaint. Yes he did. I heard him. He guffawed.

He actually thought the pair of diners was making much ado about nothing. But the disgruntled diners thought otherwise.

They pointed out to the manager that poor service – in a services industry – was just not acceptable.

In the end, their food did arrive. The manager even waived the charge for their pot of tea, as a gesture of goodwill.

I wonder what we would do, if we were in the same situation.

Would we make a fuss? Or would we simply accept that things can sometimes go wrong at restaurants.

Rubbish calls

In the grand scheme of things, a free pot of cha might not seem like much. But it is a lot more than we would get from the financial services industry, when brokers’ recommendation goes wrong.

Time and again we hear and read about brokers tips in the media. They might tell you that stock XYZ is rubbish and that it will drop to $1. They might tell us to pull our money out of, or put our money into, real Estate Investment Trusts.

I even recall one broker who said that oil could fall to $10. Where is he now, with oil at $50 a barrel?

Brokers’ forecasts can move markets because some investors put great store in them. But who, I wonder, is holding these people to account? And who can we complain to, if they get it wrong?

The answer is no one.

Success or failure

No one ever remembers who said what and when. We just accept it as something that happens in the financial services industry. But wouldn’t it be better if professional analysts are answerable for their views.

If there was a record of their calls, then we private investors can rank them according to their history of success and failure.

What about fund managers? Why are fund managers not held accountable for looking after people’s money? Why, for instance, are fund managers still paid a fee if they lose investors’ money?

We all understand that markets can fall as well as rise. Consequently, the value of our investments can decrease as well as increase in value.

At the very least

But what happens when a fund manager – who is supposed to be a professional money manager – can’t even beat the market. That is the very least that we should expect them to achieve.

So, why then are they still entitled to a fee? Please let me know, if you can think of a valid reason why they deserve to be paid.

If all you want to do is to track the returns that the stock market could generate, then an Exchange Traded Fund could fit the bill. The STI ETF (SGX: ES3) will track the Singapore Straits Times Index (SGX: ^STI). If you want to do better, then a portfolio of well-chosen shares might be better.

Neither option is rocket science. But ridding ourselves of fund-management fees can be the rocket-fuel we need for our portfolios.

A version of this article first appeared in Take Stock Singapore. Click here now for your FREE subscription to Take Stock — Singapore, The Motley Fool’s free investing newsletter.

Written by David Kuo, Take Stock Singapore tells you exactly what's happening in today's markets, and shows how you can GROW your wealth in the years ahead.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.