The Experts Lose Again
Trust your money to the experts. The dead experts. From the WSJ:
ING Corporate Leaders Trust has outperformed most of its competitors over the past decade, thanks to outsize holdings in energy and railroads, which both benefited from rising oil prices. The fund was also underweight in financials, which helped it dodge the worst of the 2008 bear market.
So who is the savvy portfolio manager who made those bets?
There is no such manager.
Which is impossible, right?
The 22 stocks in the $750 million portfolio are all descended from a portfolio chosen in 1935, set up so the stocks wouldn't be traded except in a handful of cases, such as a dividend elimination, a debt default or a downgrade. David Snowball, publisher of the Mutual Fund Observer website, calls it "the ghost ship of the fund world."
Sometimes doing nothing is the right move. And sometimes -- maybe most times -- the "experts" are unnecessary.
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Comments:
Jun '12
Re: The Experts Lose Again
Many brokerage houses -- perhaps most, I haven't done a comprehensive survey -- charge a transaction fee for each trade or other transaction.
Therefore, the brokers have a pecuniary interest in getting you to make transactions as often as they can.
Conflict of interest, anyone?
Jun '11
Re: The Experts Lose Again
If you don't know what you're doing stick w/ Vanguard index funds, contribute regularly, and don't buy whole life!
May '11
Re: The Experts Lose Again
Sometimes "experts" only make things worse. The military created Procurement Experts and the result was that it took longer and cost more and more to get new equipment and aircraft.
The civilian world created the MBA and then hyper-inflated its value and the result is a generation of people with MBA's who seemingly don't understand real value and business. For instance, the MBA population has taken over businesses and are more concerned with competing with each other for raises and promotions at the expense of the company than finding real improvements to the production and sales processes.
I admit that I don't understand much of the stock market and mergers and such, but when a struggling company buys a competitor struggling company with the idea that the new arrangement adds value, I question the value of the MBA.
When stocks are valued for relative trading value shifts rather than for the value of the product created, the result is a "service oriented" economy that only panders to itself and doesn't create its own wealth.
Maybe if I had an MBA some of this might make sense, but then I think I wouldn't respect myself.
Jan '11
Re: The Experts Lose Again
Whole life is too expensive for the benefit but if you're not going to get a whole life (or even a universal life policy), it would be wise to get the guaranteed renewal and non-cancelable riders in order to protect yourself. If, in the future, you should ever become a health risk to the underwriters, yet still want life coverage, it is the way to go.
Dec '10
Re: The Experts Lose Again
Skyler: ...
The civilian world created the MBA and then hyper-inflated its value and the result is a generation of people with MBA's who seemingly don't understand real value and business. For instance, the MBA population has taken over businesses and are more concerned with competing with each other for raises and promotions at the expense of the company than finding real improvements to the production and sales processes. ...
Have you seen the movie American Psycho with Christian Bale? In one scene, Bale's character, a Wall Street MBA type, experiences the thrill of victory followed by anguish and despair over who in a meeting has the most prestigious business card. It's an edgy movie but captures a lot of what's wrong with the MBA culture on Wall Street and large corporations.
Edited on July 12, 2012 at 7:53pmMar '11
Re: The Experts Lose Again
I love American Psycho! especially his attempts to impress his dates with analysis of music by Huey Lewis and Phil Collins...
But FWIW Rob, this fund was a dog for a long time prior to its recent success...
which illustrates that everything eventually comes back into favor in the investing world.
May '10
Re: The Experts Lose Again
ConservativeWanderer: Many brokerage houses -- perhaps most, I haven't done a comprehensive survey -- charge a transaction fee for each trade or other transaction.
Therefore, the brokers have a pecuniary interest in getting you to make transactions as often as they can.
Conflict of interest, anyone?
I really doubt that this is a significant issue. Having worked for a time in the industry I can tell you that, if such churning can be proven the SEC would like to know. That practice is illegal. It doesn't mean it can't be done, of course. But I personally doubt that it happens too often. And with the range of options now available to even the small investor, their is a lot of competition in the financial markets to risk that kind of misbehavior.
Dec '10
Re: The Experts Lose Again
The takeaway, here, is that the majority of fund managers in any given year do not beat the market. And those that do will probably be in the cohort that doesn't the next year.
Trading in equities-- unless you are a VC or have investment horizons that extend decades into the future-- is by and large an expensive betting game designed to make money for the House. The House, in this case, is comprised of the people taking fees all along the process.
The House is also comprised of organizations that can take gigantic positions with taxpayer/fiat money. Those people always get paid, of course.