Quote:
Originally posted by autofx
Fallacy #2: "That advisor or alert provider must not be doing
very well with his trading; otherwise why would he have to
charge for an alert service?"
Consider Microsoft. They have enough money to be their
own country just sales of Windows 98/NT/2000/XP. Yet
they have many other streams of income other products.
This is not to say that your average alert service provider is
as rich as Bill Gates. The point is that it makes good business
sense to open as many sources of revenue as you practically
can within your realm of expertise.
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With all due respect:
1) Microsoft example is a way irrelevant;
2) the truth is that the main stream of revenue for the most "signal providers" out there is indeed the fees charged for the signal services; they seldom manage real funds (successfully);
3) very few successful money managers are offering signal services; it makes very little business sense adding "additional stream of revenue" ( signal services) to the successful managed fund business if one considers the headache of dealing with several hundred newbies also limited income potential; the possible exception would include institutions with the extensive personnel big institutional clientele base (not the case with the two men operation selling their signals to the newbies).
The simple math tells the story:
a) signal services: assuming $100/month fee with 100 active subscribers we're looking at 10k/month revenue;
b) small 10 MM managed fund: about 17k/month 2% annual management fee alone + another 50k/month for 20% incentive fee (assuming the conservative 30% annual returns) - totals to almost 70k/month
Licensed Brokers
)
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