The Biggest Shocks After Mastering the Global Financial Market and Investments
Following Warren Buffett or George Soros, and possibly earning millions of dollars from the financial market. All these makes learning about the global financial market and investments extremely attractive.
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If the reason you get into the financial market as a Wealth or Investment Professional is to be able to spot the next great investment trend and to make millions and billions, you might be in for a big surprise.
We look at the biggest shocks after you learnt everything about the global financial market and investments:
No. 1 Knowledge is The Minimal, And Might be Secondary
Some spend their lifetime learning about Financial Market and Investments. Others understood it by their teens or early 20s.
The global financial market & investments is complex, surrounded with numbers, hard numbers crunching, excitement and volatility. The system is also ring-fenced with tons of global regulations and financial framework, written in the hardest to read-and-understand English.
In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.
Benjamin Graham
On the day you start in the financial market, the interest rate you know, the underlying insurance investments, the portfolio of equities and bonds, and just about everything in finance is connected to most major financial markets in the world.
In reality, you ain’t competing with your peers. You are competing, and partnering with everyone in the world.
No. 2 You are Far from Brilliant, Relative.
No matter how great your financial plan is, how good your investment idea is, your expected returns that outperform the market for quite some time, or how justifiable your economic views are, you might be far from brilliant.
You would likely not be creating the next
- Sharpe ratio
- Modern Portfolio Theory
- Black Scholes & Merton Options Pricing Model
- Stock Exchange
Thus, the quest towards being brilliant might only be a step better than your best peer.
No. 3 Building Credibility is Tougher Than You Think.
Despite what you know, you might need people to hear, trust and believe in you. An often ignored process is to build credibility.
What is credibility? Oxford Dictionary defines Credibility as: The quality of being trusted and believed in.
One way is to gain credibility through taking certified financial programs such as the Chartered Financial Analyst (CFA), Chartered Alternative Investment Analyst (CAIA) or Certified Financial Planner (CFP).
For example, the first Chapter on CFA focuses entirely on building credibility: Chapter 1: Ethics & Standards
- 1.1 Introduction
- 1.2 Code of Ethics
- 1.3 The Standards of Professional Conduct
- 1.4 Standard I-A: Knowledge of the Law
- 1.5 Standard I-B: Independence and Objectivity
- 1.6 Standard I-C: Misrepresentation
- 1.7 Standard I-D: Misconduct
- 1.8 Standard II-A: Material Non-public Information
- 1.9 Standard II-B: Market Manipulation
- 1.10 Standard III-A: Loyalty, Prudence and Care
- … …Totalling 31 Sub-Chapters
How do you actually build credibility? Read More: 7 Top Global Accreditations for Wealth Management
No. 4 It’s About the Relationship & Trust
For the few who have managed to moved into managing billions for the largest financial institutions, investment firms, institutional funds and families, it is no secret that relationship is key.
For example, the best investment manager’s origin might be from Hong Kong. But Norway, Italy or United States (for example) might not deploy most of its’ pension funds and national reserves to be managed by a third party, since national interests and domestic economy is at stake.
For a wealthy family or a large financial institution, their organic business or wealth might grow at a far greater pace than the financial market, thus the incremental returns from 7% to 8% or 12% to 15% from a superior Wealth Manager makes little difference to their already enormous wealth. And since they do know better, they don’t really require a better expert, they require someone who won’t mess things up and they could trust.
Example of Annualised Expected Returns on Assets:
| Type | Annualised Expected Returns |
| Interest Rates | Base Rate |
| Bonds | + 2% |
| Equities | + 7% |
| Real Estate | + 7% |
| Private Equity | + 18 – 25% |
| Business | + 50 – 500% |
Annualised Expected Returns is a presumptive illustration.
No. 5 Your Personal Investment and Trading Experience is almost Non-existent
Are you aware you might not be able to invest or trade frequently as a Wealth & Investment Professional?
Some job functions restrict you on trading, investing, or restricting trading periods or requiring disclosures. This is to prevent you from misusing information that you could have taken advantage of or to prevent potential conflicts of interests. Eg, you could easily affect the buy & sell order volume and market price.
By doing so, you would unknowingly be at risk with laws and regulations such as the common Insider Trading Act and Market Manipulation Act in various countries.
Over time, you may discover that you would have little practical personal experience in trading and investments.
Have you ever thought about why you are working so hard on mastering your understanding of the global financial markets & investments? How long would you take? What would you do thereafter?
Related Articles:
- 10 Trading Quotes from the 5 Greatest Traders of All-Time
- 20 Traders Who Lost More than a Billion
- Bernie Madoff : Scamming of America – The $50 Billion Ponzi Scheme
- Warren Buffett Documentary by Bio
- The Eureka Moments for Financial Experts and Advisors
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- 8 Reasons Why Building a Portfolio is Tough in Asia
- 11 Interesting Strategies to Advice Clients
- Most Popular Investment Theories Clients Ask Wealth Managers
- How Do You Start Advising Clients in Your New Job?
- What Happens if You Make Mistakes, Say The Wrong Things to Clients?
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