Thursday, May 1, 2008
Is subscribing iCapital worth your money?
iCapital started with publishing stock market newsletter and managing money for discretionary accounts and later ventured into fund management. The CEO is Tan Teng Boo, he attracted many fans and subscribers. He became even more popular after his closed-end fund managed to double its net asset value since its inception in 2005. AGM usually will be packed and most of the 2000 plus shareholders will turn up to listen to his market outlook. When he conducts seminars, he claimed that the seats will always sold out.
Of late, some of his subscribers have been voicing out their discontents toward iCapital of being too rude, too cocky and humiliating others to drive home a point that he predicts no US recessions of which against all other famous investors and gurus. Hard feelings and emotions aside, let's ask a realistic question: is subscribing to iCapital worth your money? How accurate is his market calls? I sampled randomly from 2003(the oldest on-line archived that was accessible), I know this is not a very scientific approach but randomness of sampling can help to eliminate some biasness.
iCapital was bearish from 1998 to mid 2003. In that sense he did not take a contrarian stand for the sake of against the grain.
By mid of 2003, iCapital called for maximum bullish for KLCI. The KLCI did continue to perform according to his call. By early of 2004, KLCI went into corrections, he maintained his bullish call. He said in 2-3 year KLCI will surpass 1200 when the market were around 800+ points. 50% increase was a bold call. That call turned out OK, KLSE did surpass 1200 in early 2007.
I picked up one of his calls randomly in 2005, he called for range bound between 880-940 for next 8-9 months, of which was quite OK too: the market was half dead.
In early 2007, he still called KLCI to break 1200 in the next 2-3 years, he was dead wrong, the market surpassed his target right after his announcement. By mid of 2007, he called for 1500 to happen in next 8-9 months and revised to a new target: 2000 point for KLCI in the next 2-3 years. The market did break 1500.
He continued to make bullish call in early of 2008 right after the market topped out in October 2007 due to credit implosion. He was still expecting for 1600 to happen in next 8 - 9 months. He was of course wrong, you could lose 20% of your money bought at 1400 level and sold at 1150.
Just last week, 24/4/08, iCapital still think it will hit 1450 in next few weeks and breaking 2000 points in the next 2-3 years with a qualifier if Malaysia can show some sort of political stability.
Well as a whole, you have a chance of 33% of losing money and 67% chance of making money by listening to him. So far, he made his bottom call quite accurately. He made the right call in 2003 was the bottom but his March 2008 bottomed-out call will remain to be seen especially there were some bad calls recently. My advice is don't take my advice, you be the jury - think and decide whether you need to subscribe to his stock market newsletter.
Happy Labor Day!