Traders & Investors Club

Hello TraderJohn,

Thank you for your question.

To quote Derren Brown, "It's not impossible but highly improbable".

Unfortunately, trading is one of those 'professions' that is marketed to the unsuspecting public as one that can be mastered over a couple of weekends. Consider that a trainee doctor studies for five years before embarking upon his/her career. Likewise, an architect will study for seven years before one brick is laid upon another. Why would a person go to all that trouble if a couple of weekends tuition is sufficient to launch a career that promises untold wealth with only a minimum of time investment required?

It is commonly accepted that 95% of 'traders' lose money. Of course, that makes logical sense because trading is a zero-sum game (less commissions and management fees), which means that for me to make a thousand pounds, nineteen other market participants have got to lose a thousand pounds between them.

Sadly, a very large percentage of the 95% are neophytes who enter the market on a wish and a prayer, lured by the kind of claims to which you have referred in your post. They are under-capitalised, under-skilled and unprepared for the reality of putting their own money on the line accompanied by the gut-wrenching pain of seeing their money and dreams dissolve in front of their eyes in short order.

Alas, although it would be easy to criticise the deliberate cynicism of the organisations that prey on the naivety of the unwary, it has to be admitted that they all, without exception, appeal on an emotional level, to that Easy-Money mentality, present in most of us to one degree or another, that yearns to become wealthy without having to put ourselves out too much. Witness the huge amount of money gambled each week on the National Lottery where the odds offered are less than derisory.

So, what should the realistic expectations be of somebody who has attended one of these seminars? Do you think that, at the very least, you should expect to perform as well as the average Hedge Fund or perhaps as well as the traders at Goldman Sachs?

As already highlighted in another Ask The Trader post, since January 1st 2009, the average Hedge Fund has made an average annual return of around 4.5% (source: Bloomberg). Surprising? In the eyes of most people, most certainly.

Surely Goldman Sachs do better than that. After all, they are the Masters Of The Universe, are they not?

Well, yes............and no.

Here is a link to the Goldman Sachs Mutual Fund Performance tables:

http://www.goldmansachs.com/gsam/app/performance/perf.do?assetClass=Equity&shareClass=A&region=US

You can see that, although a couple of funds have returned slightly better than 10% per annum, the majority of them returned more or less the same as the average Hedge Fund. Indeed, several of the Funds have even managed to lose money for their investors over the long term.

The upshot is that if Josie was able to generate the kind of returns that are claimed, she wouldn't have to be squandering her expertise on making peanuts. Goldman Sachs and the other 'professionals' would be tripping over each other to offer her an eight-figure salary to trade their flagship fund. Alternatively, why doesn't Goldman send all its traders along to the very same seminar where they could clearly learn a thing or two about outperforming the market?

In order to bring the conversation back to reality, one of the things that you could do is to request an audited copy of Josie's trading account from Money Week. Obviously, Money Week would not have published such claims if they had not been verified.

If you are then satisfied as to the integrity of the training company, ask them for a guarantee that should you, heaven forfend, not generate an equivalent level of return yourself after attending the training, they will give you a full refund of the seminar fees.

I hope it helps.

Do keep in touch and let us know how it works out.