Your fund manager gets paid by you. A lot. Does the manager spend any time at work investigating personal stocks? What about that fund manager on TV? Is that stock they are talking about really that good? or do they just want it to go up so their fund looks better?

We could fill a hundred pages on these guys. Investment bankers care about fees, period.

They package things up and push them out to clients, and could care less whether they are good or bad investments.

We only need to bring up the disaster of 2008 to make this point, where investment bankers packaged garbage loans and sold them, almost sending the world economy into another depression because of it. Enough said about them.

Traders work for fund managers or sell-shops. Thus, they are loyal to their employers (and not you the investor). They also might trade their own stocks (which inherently creates potential conflict when they recommend investments). You may, or may not hear about these private trades so can you really trust that their recommendations aren’t biased?

They may not be the worst in terms of conflicts, but conflicts definitely do exist with traders.

We like writers, except when they:

(a) Trade in the names they write about

(b) Get paid by companies in exchange for coverage

(c) Earn shares from companies for articles

(a)(b)(c) are all conflicts, obviously. 

Many stock newsletters are also tailored towards day traders. Day trading is not the focus of 5i Research. We focus on fundamental research instead of trying to time the market and make a quick killing (which typically only kills your net worth).

We are not paid by companies.

Stock analysts are generally pretty smart people. But let’s face it, they are not working for you. Their 50-page glossy research report is designed to impress the companies they are following, so those companies give more business to their employer, usually a bank or brokerage company.

Target prices and changes in recommendations are usually designed to generate commissions on trading activity. We have seen analysts change a target price from a SELL at $10 to a BUY at $300 in less than 16 months (Credit Suisse on Netflix). What value does that serve?

Plus, analysts use generic terms so as to not offend companies. “Accumulate” “Market Perform” “Equal Weight”. How about just telling us if a company and/or management is good or bad?

At 5i Research, our reports are short, and are in easy to understand terms so you can take away what you need to know, quickly. Nobody reads 50-page reports, anyway. If a company is lousy, we tell you. We don’t need to impress anyone. We don’t care if we rate a company “F”. That company doesn’t pay us, so who cares if they don’t like us? We work for our members only.

These companies are paid, sometimes tens of thousands a month, by public companies who want them to spread the word of their company and drive their stock up.

While they do provide a service, obviously if you are paid this much you might present a company only in the best light possible.

In our years as a Portfolio Manager, we have learned to be careful with PR and investor relations firms, as their conflict is just too great. All the companies they represent sound like the next greatest thing, which we know from experience is not true.

Almost every financial website out there needs to make money. If it is not through subscription fees, then YOU are likely the product in some way.

We work hard to keep our subscription rates low and value-add high so you keep coming back and so we don't need to turn to advertising or payments from companies to be 'featured'.  

 We work exclusively for you.

Having worked at a rating agency, we know all about conflicts. To get a bond rating, a company PAYS the bond rating agency. Could there be a bigger, clearer conflict?

After the financial crisis of 2008, the rating agencies were taken to task by the government on the issue of conflict, but their basic model of getting paid by issuers still remains the same as before.

How can a CEO have a conflict, you ask? Well, quite easily. If the CEO owns shares or options, he or she has a clear incentive to promote their own stock.

Now, we want CEOs to own stock in their own company, don’t get us wrong. But, as soon as they do, EVERYTHING they say has to be treated carefully, because they get rich if their stock rises.

We have seen too many CEOs of companies outright lie to promote their own stock positions. Obviously this is a clear, defined and dangerous conflict of interest.