Does Market Call add value to investors?
Or is it part of the sell-side promotion of advisors designed to help them seduce clients for their own benefit?
I often watch BNN Bloomberg’s “Market Call” to listen to the views of the advisors, portfolio managers, and other highly paid “experts” who make public recommendations on what retail investors should do with their money. Some of them - like David Burrows, Jaime Carassco, and John Zechner, are very capable and quite sensible and I enjoy listening to them and hearing their considered views on various elements of the economic background and the specifics of companies they are asked to comment on by viewers. They don’t gild the lily, admit their errors, and provide viewers with a real benefit in my opinion.
But others, I just don’t get why they bother.
Today, a partner and portfolio manager at Campbell, Lee & Ross advisory firm was on air talking about global securities. He was presentable, seemed knowledgable and had a pitch that came across as a sales pitch for his firm without mentioning his firm. I listened with interest until he reviewed his “Past Picks” from March 28, 2023, almost one year ago. That is where he lost me. Here is the summary of those “Picks”:
Mr. Sisson is a frequent guest of BNN Bloomberg and seems to be on Market Call every few weeks, if not more often. His demeanour in reviewing his March 2023 recommendations demonstrated a certain level of pride, almost smug. It is reasonable to presume the three names he chose as “Top Picks” March 28, 2023 were his “best ideas” and he sincerely believed investors would benefit from their purchase. After all, the fourteen percent “Total Return” after one year seemed reasonable at first blush.
Or was it?
The passive ETF which tracks the Standard & Poor 500 industrials (SPY) traded at $395.60 on March 28, 2023 and is $507.14 today, a gain of 507.14/395.6 = 28% for that precise period and 25.44% year over year.
I am confident the management expense ratio on the SPY ETF is a fraction of what Campbell, Lee & Ross charge clients to manage their money. They manage money solely for high net worth clients and have a minimum asset level of $500,000. The SPY ETF has an expense ratio of 0.09% meaning an investor pays $450 for a $500,000 investment. Is it likely Campbell, Lee & Ross will manage $500,000 for a client for a fee of $450? I doubt it.
Last March, an investor who saw Darren Sissons on BNN Bloomberg, was impressed with his analysis and commentary, and invested $500,000 in the three companies recommended would have had a return before fees and expenses of $70,000. If that investor had put $500,000 in the SPY ETF his return would have been $140,975.73 before payment of his $90 fee.
I don’t know about you, but if his March 28, 2023 “recommendations” are typical, I would avoid Mr. Sissons advice and, if unable to manage your own money, buy units of SPY and go on holidays. I am sure some of Mr. Sissons stock picks are geniune “winners” but I would be a bit less smug about the 14% return on the March 28, 2023 recommendations and if I were presenting them as he did, I would be sure to tell viewers that the 14% was about half the return on the S&P average.
BNN Market Call host Andew Bell would assist investors if he restrained himself from pretending the 14% return was an achievement and ensured viewers had in front of them information as to how the 14% return compared to market averages or some other suitable reference point.
There are 2 good financial sources in Canada, 1 I've followed for a few years, keystocks. Com a service and the Canadian investor podcast with a couple a sharp amateurs more recently, both are very good and good learning sources.
Of course you know the talking heads are the customer buying time on market call, so we the watchers, our eyeballs are the product. These people are the sales people who might also be a money person, but they need to promote.