Only highly qualified and experienced personnel, normally those with the ACA or Chartered Financial Analysts (CFA) qualification, can do the job.
In fact, the mutual funds is a viable mechanism for the middle class to invest in the stock market. You and I cannot even understand the basics of investing. There are seasoned professionals. They do know what to do. For instance, when there are reports that there is quite a bit of a drought, due to inadequate monsoon, they will boldly buy stocks of a particular company dealing in what is called drip irrigation.
The stock price will go up and when there is a huge profit, they en cash the money. This is legally allowed, with certain conditions, and the Securities Exchange Board of India (SEBI), acts as the watchdog, and this body can regulate every single move of the mutual funds. It can regulate the market, since it can change the rules too. For instance, in the case of Unit Linked Insurance Products ( ULIPs) a huge amount of money was cornered by the agents, and the investor was left high and dry.
SEBI stepped in, and regulated the commission that can be paid to the agents.
Eliminating poverty is another story altogether. Today, mutual funds is the only viable alternative for the middle classes to earn some money. Please do note that only the capital appreciation in the case of any fund, is taxable, and, the limit is one lakh. That is, if your capital appreciation is one lakh rupees, or more, you have to pay ten per cent as income tax.
Regarding tall claims, you need to do your own research. There are superb firms that operate on your behalf, and help you to do the right investment. Kindly note that even in the case of the Systematic Investment Plan, where one can invest something like Rs. 500 per month, and keep it growing, there is absolutely no risk involved, as your money is very safe and nothing will happen. At the end of say, 48 months, you will get something like Rs.28,000/-, which is much higher than what you will get through a bank recurring deposit. Please do note, that the Recurring Deposit income is taxed every year. You have to show this income in your IT returns. The tax guy will be watching whatever you invest. You cannot hide anything at all.
After one year, the SIPs are not taxed.
Regarding investment in stock market, it is a very risky investment, even in normal times. If, say, there is a war like the Kargil war, with Pakistan, even the Mutual Funds will take a huge hit. In that event, you must try to exit, with whatever gains you can make, and then re-enter the market when you the times are good.
In spite of the horrible effects on the common man, the economy is growing. Imagine, for example, what will happen to the FMCG companies? Even those that market small packets of some local pickle brand, in limited markets, will make money, as there are always buyers for such products.
So, if you want to invest, better do your research, and then do it, with the help of an expert. Please do not get into it directly, as the knowledge base is acquired only over twenty years. There are professionals who have stayed with the trade for so many, if not more, number of years.