Market gurus and investment advisers have no idea where the sharemarket is going and are only lining their own pockets, says one who should know.

Self-described former guru and investment newsletter writer Mark Tier, now based in Hong Kong, ran a gold price tip sheet at the end of the 1970s and lost so much "I was at the edge".

But, after a long hiatus of not investing, Tier has spent the past few years writing a book about Warren Buffett, the world's richest investor, and George Soros, the world's biggest currency speculator, and lives off his share investments.

While writing his own newsletter, World Money Analyst, and later mixing with other investment tipsters, he concluded none was any better at making predictions about the market than he was, which wasn't saying much.

"None of the fund managers I met was any good at making predictions either," he reveals in the book.

"And almost none of them consistently made money for their investors or consistently beat the market, for that matter."

One even admitted, when asked why he didn't just trade for himself if he was so good, that being a fund manager "had no downside risk" and "when I manage money I get 20 per cent of the profits, but I don't share in the losses".

While not many Australian fund managers would get 20 per cent of the profits, Tier points out the role of fund managers isn't to make money for clients but "the ability to pull new money". Mind you, a good performance could only help.

Well-known tip sheets Rivkin Report and Fat Prophets claim an 80 per cent success rate over time.

Neither Buffett nor Soros tries to pick the market. Nor do they diversify. They specialise, something advisers tell you not to do. They are also more focused on not losing money than making it. But the real revelation in The Winning Investment Habits Of Warren Buffett And George Soros (Inverse Books, $34.95) is they spend far more time analysing their mistakes than their successes. Soros once said recognising his mistakes was the secret of his success.

Buffett and Soros are quite different. Tier points to 23 habits that produce the mental attitude they share that anybody can copy. "It's not what to buy but how to think that's crucial," he said. And this applies to any investment, not just shares.

Tier tested his conclusions by seeing if they worked for him. They did. He claims to have earned 25 per cent a year since 1998 from the Hong Kong and US sharemarkets by choosing shares with high dividends, a solid business and good management .

But he made boo-boos too.

"One stock went to zero. I realised I hadn't done enough research. I broke my own rules."

He has picked six stocks with one thing in common they make things for other companies, such as shoes for Nike or lenses for spectacle makers.

The good news is that research doesn't mean endless hours of reading entire annual reports like Buffett.

Instead, read what the chairman said in each of the past five reports (usually it's barely a page) and compare it with what happened. If the predictions were wrong, see if there's a good reason given, or buck-passing excuses including the trendy but meaningless "difficult market conditions".

Going to an annual general meeting, where the directors are on display, can also be informative, especially if you're a good judge of character.

Just getting on the phone can tell you a lot, too. "You'd be surprised who you can get to talk to you in smaller companies," he said.

Talk to the company's competitors as well. And talk to staff where you can. The sales people at, say, a department store, will tell you how a product is going.

What the winners do

invest for stimulation, not money.

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