Stock Advisory in India

With there being more than 2500 listed stocks that trade every day, picking the right stock is tough for professionals, let alone Individuals. If you are an Investor wanting to build a stock portfolio, how do you go about it?

The answer is basically two fold,

1. You do your own research and buy stocks that you believe in.
2. You outsource the decision making to a third party and take the trades advised by them.

Friends who know me know how anti advisor I am. This has been borne out of personal experience with stock advising. For those who don’t know, I long back had started an advisory, was part of another advisory firm started with a few friends and then worked (though my role was different) in a firm that had stock advisory as one of its offerings.

What was uniform across the three was that performance (as I measured) was below par given the commitments that were required to be put in by the Individual who took such a advice. Advisory, especially of the Stock variety is asymmetric in nature. You not only pay the advisor beforehand, you have no recourse in case they fail to meet the expectations (on which the product has been sold to you).

Worse, many a firm locks you into the plans with no exit in case you want to get out. Prorated refunds are essentially something you barely find among most of the firms. Remember, the cost of advising 10 or 100 more or less remains the same and yet, they want to make sure that you cannot exit.

But then again, this is an Industry that seems to be growing by leaps and bounds going by the number of people who are registering and offering service to Investors. The one common factor is the returns they seem to have generated in the past. Most beat the best mutual fund out there handily. Of course, given that there is no Audit or third party tracking, it’s a guess as to what the real returns to the investor could have been (after accounting for slippage / taxes).

While collating the list, I left out advisors who also provided advice to traders (Intraday / Derivatives). I believe that most advisors who offer intra-day service / positional derivative trading ideas know that most clients will get burnt and yet the attraction of easy fees attracts most of them to offer such a service.

So, without further ado, here is the list (which shall be constantly updated over time) of Stock Advisors. Do note that for it to make sense, you need to commit enough capital to make the cost less than 3% of your portfolio. Else, the returns no matter how good they are will be meaningless from your net worth point of view.

Link to google spreadsheet.