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Sentiment Speaks: Most Money Managers Gamble With Your Money



  • The reasons as to why money managers do something often make me scratch my head.
  • Money managers are not often aligned with your goals.
  • It's time to take stock (pun intended) as to whether your goals are aligned with your money manager's.
  • This idea was discussed in more depth with members of my private investing community, The Market Pinball Wizard. Learn More »

Invest Portfolio, Stock Market Trading Concept. Tiny Investor Male Character Sit at Huge Briefcase Juggling with Coins
Photo by lemono/iStock via Getty Images

I really wonder how many of you that read this article entrust your hard-earned money to money managers? My next question is, of those that do, how many of you really understand your money managers' approach to managing


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This article was written by

Avi Gilburt profile picture

Avi Gilburt, CPA., is an accountant and lawyer by training and the founder of Elliot Wave Trader, where along with his team of analysts, he specializes in identifying the major turning points and market trends so you can invest more confidently while applying appropriate risk management.

Avi is the leader of the investing group The Market Pinball Wizard where they help members gain a more real-time understanding of where the market is likely heading. Features of the group include: daily S&P 500 directional analysis, intraweek metals analysis, weekly expanded analysis on the S&P 500, metals, USO, and USD, weekly live webinars where we walk you through the charts we are tracking, and community chat with direct access to Avi and his team of analysts to ask questions. Learn More.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (141)

Echo 16 profile picture
Over my 50 years of investing, I have left several money managers and one has canceled me. The deal was always, giving them a couple years, I would stay with them as long as they do better than the return on the investments I still managed. With their fees and operating in their own self interest, none succeeded. I am sure there are good ones out there but I haven't found them. I am considering Fisher Investments but I can't yet bring myself to give them a try with $1M.
@Echo 16 Fisher is no different. I left them earlier this year and they are being troublesome to resolve several issues of their doing.
Pablodiscobar profile picture
@Echo 16 no one can be a better guard as yourself for your own money !if the 10% roi contracts were mandatory , there would be a shortness of financial cowboys
@Echo 16 Did you give them a try? How did they do?
I will never use a money manager again since the last moron put us in highly rated mortgage backed securities just before 2007-2008 for "safety". I have been my own money manager from then on.
Pyraminsider profile picture
The broker I spoke with back in March was bearish and did not encourage me to put assets under his control. So I opted for self directed trading and started with a small short position. If you are sure you aren't going to go long till there is a correction you might as well make a little money on a small diversified short position. Mondays post holiday high triggered a virtual stop that tripled up my short position so now I only have 24% of my gambling pool available to start feathering back long at the bottom. I really hadn't planned on wiring more money into my gambling pool to cover another double down short.

Bad short term advice that may trap a new investor initially can still end up profitable after a hundred days with a money manager advising you to stay the course. You just can't trust a short term market trend forecast.
Long and Short of It profile picture
I've managed my own money since grandma gifted me a few shares of grandpa's employer's stock in the 90s.

I pulled my wife's money from a Morgan Stanley fool who had transitioned her out of standard balanced portfolio (stuff like JNJ, Clorox, Google, Apple, Verizon, Amazon, Boeing, 3M, and some corporate credits: basically a very expensive SPX) and into deep value in 2013 and bought almost 30% of her SMA into MLPs and oil in 2015, holding them to severe and permanent capital loss. This guy had $BPT - yes, that scam which I was simultaneously short - long in her account from $100 to $12 for an 80% capital loss including dividends. He had $SDRL held to bankruptcy. Others, too.

He charged 200 bps/year for the privilege of destroying that much wealth. After four years of my ministrations it's slightly surpassed its ATH thanks to $TSLA and $UI, but it should be double that by now.

That's not the worst story I've heard, either.
I had a money manager, some time ago. During an annual review, he gave me the “hard sell”. My question at the time was, “Why is my financial advisor trying to appeal to my emotions? Duh! A year of reading later, my final words to him were, “I’m going in a different direction to which he replied I think you’re making a big mistake. I am sure you do as I hung up the phone.

Do you think the U.S. market will ever recover after the next major crash that rivals the Great Depression? Will it be time leave the country?
Eric Stalee profile picture
@D47 Look on his chart/post for "You need to show this chart to your grandchildren".

Short answer, yes it appears at the current time likely to recover. Tremendously. The market will first have to hold support regions during whatever larger degree correction happens in the future...but assuming it does it will be a once in a lifetime opportunity (literally).
Bah Humbug profile picture
@D47 The US does have a lot of federal land they can sell, but there might be some crazy laws they pass during that collapse that will need to be cancelled.
@Bah Humbug I think you open a can of worms with that statement.
Long Time Running profile picture
My son was complaining the other day his manulife retirement fund account only generated a 9% return for 2020.

He was expecting 30%.

No regard for defensive positions, diversification, the long term outlook.

Maybe he should withdraw his retirement funds and go with the Elliot wave theory?
Long and Short of It profile picture
@Long Time Running if he only pulled 9% out of the market in 2020 of all years, he should try something assuming he's not already retired.

Returns that low in this market are basically losing money. You can get better returns than that and still be diversified and defensive. For *****sake a 70/30 SPX portfolio with zero rotation or factor tilt would have blown that out of the water.
Long Time Running profile picture
@Long and Short of It , the S and P 500 return for 2020 was 15.75%, 16% reinvesting dividends.

This is my son's retirement account so it would have balanced funds, bonds etc. A very defensive positioning to protect against downside risk.

His equity should double in a decade with compounding if the return is north of 7%.

And lets not forget we are in a low interest environment, real rates are negative.
Billr331 profile picture
In 2016 I moved all of my money from a money manager into my control. I have been extremely happy with how my investments have grown over the years since I took the money away from him. You are right his goals and my goals did not align I recognize that and took action. Bill
Please, please! A contrary indicator with 100% Rho should be shared. Who is:

"Last year, I remember one money manager on Seeking Alpha told his clients to sell their positions as we were approaching the bottom in March 2020, and then during the rally, said money manager strongly urged his clients to aggressively short the market all the way to the September high, when he then proceeded to turn bullish. And, that was exactly when the market began a two-month pullback.
First time I agree with Mr. Gilburt. Scary!
Avi Gilburt profile picture

Then you must not be doing very well in the market, as we are killing it!! :)
@Avi Gilburt can you explain what killing it means ? (percents or dollars)
Avi Gilburt profile picture

Each person is different, based upon their own risk profile.
brityieldstudent profile picture
Avi, please just start a mutual fund of your own. I will write you a cheque on day 1!
BM Cashflow Detective profile picture
A money manager is the one with the experience.

An investor is the one with the money.

Subsequently, the investor is the one with the experience.

All money managers are good or bad ... it all depends on who is telling the fairy tale.

We don't stop gamble cause we're getting old
we get old because we stop gamble.
Money managers don't get older, they are only occasionally replaced by younger ones.

Most investors often have no choice but to believe because, despite what they knowledge, they don't really know whether they know.

... and because of these reasons, the repetition is the mother of eternal wisdom.

BM has spoken. My service for you. ;-)
Market is a casino, free money and leverage is driving the expensive mkt.

Look small funds can create a big drawn downs. We saw 2 in last 2 months.

Time to go cash at these levels. The mkt is at 200% of gdp with US mkt cap 43Trillion which makes it abosultly ridiculous and coprates have the highest debt levels.
The mkt has already priced stiumuls and infra spending and all possible rosy scenarios like opening etc. Problem is the we already at 95% opening of economy so do not see real big pickup in earning or growth.
@NS100, get back to us in 6 months and tell us about how your investment outlook performed. Everyone is an expert in their own mind and you never back-test your assumptions/predictions.
Hairy Pawter profile picture
@jkthomas56 Its easy to make several predictions and back-test the ones that work, ignoring the ones that don't. Predicting the future isn't as easy as it used to be. Ha!
Senshin profile picture
Really love your articles, again very informative. Thank you for your effort.
Taurus Eternal profile picture
“By the time we reach my target, I can assure you that you will hear talk of a "new paradigm," and how the Fed has "conquered the business cycle."


this sums up why i think the market will keep rising, as you do. everyone has one foot out the door, complaining about bubbles and valuations. the real bulls are few and far between. everyone is still bearish, they’re just reluctant to sit out of the market and miss it
This article forecasts, and is indicative of other forecasts of the "Beginning of the End" as it will be. No one knows but the Father. And it shall be.
Avi Gilburt profile picture

And, G-d has given us clues into His plans:

for freedom profile picture
@jamerson and where will the market be when the wef gives us all a ubi. Soon the MASK will be exchanged for the MARK
Eric Stalee profile picture
@jamerson It does not. A depression is not apocalyptic. Get a grip.

The article mentions that a historically significant depression is likely on the horizon in the next few years. That may last for a decade or longer. Just because the world experiences an economic depression, doesn't make it the (beginning of the) end of the world. Banks have gone bankrupt before, most developed countries just haven't experienced it in any significant or consequential fashion for...80-90 years. Basically a modern human's lifetime, which is exceedingly short.

People who believe in apocalyptic mind virus crap are going to be the ones who least benefit from the eventual opportunity that comes with the business cycle's way of cleansing bloat. There's plenty who already missed out on the opportunity provided by the market in March/April of 2020.

The world has always been ending. It ends every day for thousands of people. They die. Others continue to live. Sometimes the figures get minimized, sometimes they get maximized.

I caught this on your site posted on 3/26:

“We ended up making the low directly into these parameters at 3853.50. Since then we've seen a rally of 84.80 from the 3/25 low. The potential for higher prices comes in at target 1 at the 4019 area if we can continue to clear the hurdles on the way up. The next hurdle is 3955.97. “

The author was wrong, the close on Thursday ended up being 4,019.87. :)
marinusa60 profile picture
RN Elliott in the 1930's and Frost & Prechter in the 1970's paved the way for some excellent analysts such as yourself, Elliott Wave International and others such as Sid Noriss (ElliottWave Plus), and Elliott Wave Forecast. A freelancer named Daneric offers some stunning free graphics.

At this critical junction of the market edging into the heart of the 3rd of the 3rd wave, will other Elliott Wave have to reverse course sharply or be left in the dust if the S&P 500 market moves to a 4000- 6000 scenario? I for one will not be shorting this possible historic rise. Got my portfolio ready.

Thanks for your comment ... my photo is of the Dutch North Sea dam on a visit in 2014 ... is there a market analogy here regulating the proverbial bears? ... this is the result of the massive flood 1953 taking out so many earthen dams ... the Dutch know how to keep dry (LOL !!!).
Avi Gilburt profile picture
I would prefer to not be included within the same list of some of the analysts you mention above.
Eric Stalee profile picture
@marinusa60 Daneric's forecasts are some of the most awful out there and it's quite dubious they can be considered "Elliott Wave". His 'forecasts' are more like..."we're topping...tomorrow!"

Avi's method, while subjective just like any other form of Elliott Wave analysis, is far more methodical than EWI, EWF, or Daneric.
@Avi Gilburt You time will come...if you at least simi nail the next great depression aka close to less than 2 short years away....
Millionaire_Traveler profile picture
All I can say is that I hope you have a healthy dose of scientific skepticism about Elliott Waves... As a professor of statistics and a long term investor, I can't help but smirk at the very proclamation that someone is able to predict, to any mentionable degree, the trajectory of the stock market using Elliott Waves.
Avi Gilburt profile picture

And just like any other professor . . if YOU don't understand it then it cannot be done!! lol

I really get a chuckle out of the academic class in this country that thinks they are that much smarter than anyone else. So, thanks for your "opinion" about something of which you know nothing about!! :)
Millionaire_Traveler profile picture
@Avi Gilburt No I totally understand it, and it's easy for me to prove that it is no better than a coin flip.

I also totally understand why someone trying to sell courses claims that he figured out the SECRET THEORY to the market :)
Avi Gilburt profile picture

You "totally" understand it? Sorry, but I find that hard to believe if you have this perspective. And, I have come across MANY like you before . . . most of whom have actually become long time members when they were able to approach it with an open mind . . . which, sadly, is not likely within the academic world today. You live in a very closed minded system.
I'd love to read what sentiment says about gold at the moment
@detonator077 It says Gold may take a year to correct, but the stock market can do it in a week. Imagine that.
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