Isaco

ISACO is an outfit that will advise you on which Investment Funds to invest in.

They charge their clients £3000 per year for this information.

According to ISACO web site since Dec 31 1997 they have returned 149%.

How does this compare with a low cost SP500 Index Tracker Fund?

A well known SP Tracker Fund returned 270% with dividends over the same period.

BUT...keep in mind that anyone stupid enough to get involved is also out of pocket by £57,000 in yearly charges over this period.

Instead of giving ISACO £3000 per year our investor had added the £3000 per year to the SP500 Tracker, how much would that be worth now.

Around £130,000.

Taking ISACO's advice has cost our naive investor 120% in investment advice and £130,000 in investment fees.

Ouch, that's gotta hurt.

Overconfidence Bias

The polite term is Overconfidence Bias.

I like to call it Smart Ass Syndrome.

But either way it has probably sank more ships than anything else in the history of mankind.

Lets look at some real world examples, they're always the best, especially where money is concerned!

And we can find a ton of them in ISACO's book, Liquid Millionaire.

Written just before Credit Crunch we can look back and see just how stupid these guy's really are.

" I reckon that with some fancy fund picking and a touch of luck, you could make close to 30% annualised returns"...ISACO GOT NO WHERE NEAR THIS DAY DREAM.

"Beat the Nasdaq or better over the next 10 years"...DREAM ON.

"What we now know is that the system my clients and I use is capable of beating the Nasdaq"...NOT OVER THE LONG TERM.

"Beginning some time between 2006-2008 the US and other securities markets worldwide will experience the first of many nonotech stock booms."...HANG ON A MINUTE WASN'T THAT CREDIT CRUNCH.

"You do not buy Index Tracker Funds because it is possible to beat the index's if you know what you are doing"...ISACO's TRACK PERFORMANCE HAVE
UNDERPERFORMED THE INDEX'S.

"Because of my absolute certainty and my belief in my abilities. I decided to Bet the Ranch"...SMART-ASS SYNDROME BY THE BUCKET LOAD.

These guys are wealth destroyers not wealth creators and it's down to OVERCONFIDENCE BIAS.

If these guys were the great traders they have said they are, they wouldn't need our money.