I first discovered Titanvest on reddit last year, and after reading a bit I put a few thousand dollars into it. After reading their annual letter this year, I'm definitely out.
I was taken in by their promise of bringing "hedge fund investing" to everyone, and of working to make you a better investor. All of this marketing bullshit is on their website, and almost all of it seems ridiculous now. But let's go through a few key points...
Performance this year was pretty bad:
- 2018 Q2: 3.6% (versus S&P500 3.4%)
- 2018 Q3: 7.1% (versus S&P500 7.7%)
- 2018 Q4: -15.1% (versus S&P500 -13.5%)
- 2018 total: -7.5% (versus S&P500 -6.1%)
So they barely outperformed in Q2, trailed the market in Q3 and Q4, and significantly underperformed for the whole year. And we're paying fees for this?
And of course, the performance figures you can see on their site (where they say they had All-Time performance of 12.4% versus the S&P500 of 9.1%) are HYPOTHETICAL. That is, completely made up.
Why are they losing money? The strategy is bullshit:
- Bad data: They seem to be copying major hedge fund holdings from 13F filings. The problem is that those filings are delayed by months, and only tell a partial picture of a fund's strategy. So if you see that some great fund owns Facebook... well, all you know is that they owned shares a few months ago... they may have sold them off already, and also may have been completely hedged against a fall in Facebook stock through derivatives, a short position, or other internet stocks.
- ETFs are better: By the way, if this is a strategy you actually want, you can get the exact same thing from ETFs (click for more) but with LOWER FEES, MORE TRANSPARENCY, and support from any major brokerage from Schwab to Robinhood.
- Their "Hedge" doesn't make sense: They "activate a hedge" when the market has fallen a lot. I could write paragraphs about how stupid this is. Only after the market falls do they activate this, so you're mostly likely to loss money, then have a short position when the market starts to recover. But who knows - Titan is basically saying they can time the market with this, something almost no experienced investor tries to do. A hedge fund has an exposure target... they may play with it depending on conditions, but they don't try to "activate" a hedge after the market has fallen. This is stupid for a million reasons.
- The team doesn't understand the market: From reading their notes, I don't think they understand basic principles. They seem shocked when one of their stocks falls despite a "good" quarter - they don't understand (or pretend to not understand) that the investors might have had higher expectations than just "good". If revenue grows 10% but investors were expecting 15%, then the stock will likely fall. Investors (particularly hedge fund investors) understand this.
Even if none of that bothers you, there's so much sketchiness:
- So. Much. Propaganda: Every time the market is up, they send out a self-congratulatory email ("Big Gains, Not That You Should Care" was a subject line from a few days ago). Well of course, there are up days and down days, you can't just boast about the up days, unless you're also going to email us when the market falls.
- Videos are embarassing: They make a big deal of the education videos they put out on the app, which dumb down finance to a high-school level. It seems like all those condescending videos are just designed to distract you from the losses in the market.
- They bury performance information: You would think based on these emails, that they're killing it. But you have to dig hard (e.g. page 9 of the annual report) to find the actual performance data. "Hedge fund letters" (not that Titan is a hedge fund) typically put this data at the top of page 1.
- Spamming subreddits: They're all over some subreddits with a lot of bullshit commentary, as well as a lot of comments with seemingly-insightful-but-really-derivative commentary. Reddit is not a good place to shill a product like this.
- Hard to withdraw money?: There's a lot of comments in other threads about this. Hopefully I won't have trouble when I try to get my money back (what's left of my money, that is).
Anyway, I wish them the best, but also I think some of these things needed to be discussed, and I didn't see any honest reviews out there. Best of luck to all of you, including the Titan team (which I think is going to learn a lot from this experience).
Submitted January 22, 2019 at 01:16PM by BroadGolf http://bit.ly/2FRpoVc
