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Posted on 2/10/09 at 4:42 pm to amsterdam
quote:
I am constantly being told on here to back what I say. Now its your turn. If you think this is B.S. then back it up.
Its easy to cry BS, but I know for a fact Im right when you look at trailing 10 year returns or longer
What the frick are you talking about? You are claiming victory for having gone back with benefit of hindsight and picked out the lucky few funds who happened to outperform over the random period you chose? Whoop de do.
Posted on 2/10/09 at 4:53 pm to Tiger JJ
when you consider there is something like 18000 mutual funds in existence and by your numbers 14% outperform the market. That to me says that there are about 2500 funds that beat the market on an annual basis. More than a few "magical" funds.
Im not claiming victory based on hindsight. I pointed out how unfair that was several times.
My point is this that if a fund has outperformed its index over the last 10,20,30 years then there has to be a reason. That doesnt happen by accident. Which again allows me to point out that there is a process in place for managing the fund, and if it has outperformed over a long period of time I think its only fair to say that it will continue to do so.
But, as I said, if you disagree then prove me wrong. Show me where it says that the funds that overperform are always from a completely random group and that overperformance is due to luck rather than skill.
Im not claiming victory based on hindsight. I pointed out how unfair that was several times.
My point is this that if a fund has outperformed its index over the last 10,20,30 years then there has to be a reason. That doesnt happen by accident. Which again allows me to point out that there is a process in place for managing the fund, and if it has outperformed over a long period of time I think its only fair to say that it will continue to do so.
But, as I said, if you disagree then prove me wrong. Show me where it says that the funds that overperform are always from a completely random group and that overperformance is due to luck rather than skill.
Posted on 2/10/09 at 4:59 pm to amsterdam
quote:
when you consider there is something like 18000 mutual funds in existence and by your numbers 14% outperform the market. That to me says that there are about 2500 funds that beat the market on an annual basis. More than a few "magical" funds.
14% is a paltry number.
quote:
My point is this that if a fund has outperformed its index over the last 10,20,30 years then there has to be a reason.
Right. There are 2 choices:
a)a super tiny subset of the already small subset of outperformers is truly skilled
b)the rest got lucky.
quote:
Which again allows me to point out that there is a process in place for managing the fund, and if it has outperformed over a long period of time I think its only fair to say that it will continue to do so.
I think it's fair to say you have ignored all research into this which proves exactly the opposite point you are trying to make.
Other stupidities inherent in your argument:
--you don't seem to realize that "annual returns" are random human constructs. Bill Miller "beat the S and P for 15 years in a row", yet there were 12 month periods during that time when he didn't.
--Would Bill Miller have showed up on your list if we had this argument 18 months ago. Yes, of course he would have.
Posted on 2/10/09 at 5:03 pm to amsterdam
quote:
Show me where it says that the funds that overperform are always from a completely random group and that overperformance is due to luck rather than skill.
LINK
That's a link to Google Scholar and as many papers on the topic as you care to read. If you weren't a financial services industry hack wasting your clients' money, then you'd at least be familiar with some of these papers.
Posted on 2/10/09 at 5:04 pm to Tiger JJ
As many times as you post on this board I really expected more from you on this.
The points you make seem to tell me you cant back what you say, you just try to belittle my argument
Where is your evidence backing your stance, Im not letting you slide that easy
The points you make seem to tell me you cant back what you say, you just try to belittle my argument
Where is your evidence backing your stance, Im not letting you slide that easy
Posted on 2/10/09 at 5:06 pm to amsterdam
Now Im a hack wasting peoples money 
FWIW I do research on everything I say, and thus can at least argue my points
FWIW I do research on everything I say, and thus can at least argue my points
Posted on 2/10/09 at 5:08 pm to amsterdam
quote:
That to me says that there are about 2500 funds that beat the market on an annual basis.
Thats pretty much incorrect anyway you look at it. I would love to see a fund that has a proven record of beating it annually. Please show atleast 15 years.
Posted on 2/10/09 at 5:11 pm to amsterdam
quote:
As many times as you post on this board I really expected more from you on this.
Please don't expect any more from me than not accommodating ridiculous industry talking points. Embarrassingly ridiculous.
quote:
The points you make seem to tell me you cant back what you say, you just try to belittle my argument
Come again? I've backed myself up plenty. It's you who haven't done jack shite but spew industry bilge.
quote:
Where is your evidence backing your stance, Im not letting you slide that easy
Do your own research. I've linked you to a lot of primary research that one would presume you to be familiar with if you actually cared about your clients' outcomes.
I notice how you completely ignore my Bill Miller remarks.
Posted on 2/10/09 at 5:12 pm to C
Damnit you two, I was going to demonstrate that with a post full of charts aligned to start at different points. Needless to say that outperformance varies GREATLY depending on the timeframe that you pick.
Posted on 2/10/09 at 5:13 pm to Colonel Hapablap
I still don't understand what the argument is here. We know for a fact that some funds hit the lottery. So what?
Posted on 2/10/09 at 5:16 pm to Tiger JJ
he thinks that means that they have some magical unicorn formula to always beat the market.
Posted on 2/10/09 at 5:17 pm to Tiger JJ
quote:
I still don't understand what the argument is here. We know for a fact that some funds hit the lottery. So what?
I think Colonel was trying to prove that even that doesn't really happen once you take out fees, and that financial advisors who just stick moeny into these random equity funds aren't doing anyone a service.
Posted on 2/10/09 at 5:19 pm to T Ba Doe Tiger
quote:
Look I am trying to be objective. Would you settle if a fund beat the index on rolling 10 yr periods a majority of the time?
No, I would not. The problem is that you're answering a different question than the one that was posed.
The original question is (if I remember it correctly, I'm not digging through the archives) - does active management beat passive index ownership over the long haul, and should I as an investor choose one over the other?
As I have said before, I believe that taken as a group, index funds overall beat actively managed funds. I also believe that the best actively managed fund will always be better than the best index over that same period.
The problem is that the second statement isn't relevant because there is no way to answer it in advance. You need to pick your fund *before* you know how it will do, not after.
So, in *advance*, I believe dollar-weighted portfolio of index funds will beat, in advance, virtually all actively managed funds. Yes, there will likely be a few that it doesn't beat. But you have to pick one that will do better by 2020. Any dumbass can pick the best fund in hindsight.
Posted on 2/10/09 at 5:28 pm to foshizzle
I'll put this another way:
Suppose you see a couple of guys playing dice in the Quarter. Person #1's dice are loaded - all six sides have four pips each. He has five of them. Person #2 has regular dice. He has 100 of them.
Suppose you now get to place $100 on the roll of a single die. Which do you choose? The answer is obvious - player 1. The chances strongly favor you. The fact that player 2 will roll plenty of fives and sixes demonstrates nothing. You have to pick the *one* die that is best without any foreknowledge.
Suppose you see a couple of guys playing dice in the Quarter. Person #1's dice are loaded - all six sides have four pips each. He has five of them. Person #2 has regular dice. He has 100 of them.
Suppose you now get to place $100 on the roll of a single die. Which do you choose? The answer is obvious - player 1. The chances strongly favor you. The fact that player 2 will roll plenty of fives and sixes demonstrates nothing. You have to pick the *one* die that is best without any foreknowledge.
Posted on 2/10/09 at 5:29 pm to Colonel Hapablap
quote:
he thinks that means that they have some magical unicorn formula to always beat the market.
*cough Bernie Madoff cough*
Posted on 2/10/09 at 5:30 pm to LSURussian
have you seen a chart of that guy's returns? It's a freaking line.Posted on 2/10/09 at 5:34 pm to Colonel Hapablap
whats the stock symbol?
Posted on 2/10/09 at 5:35 pm to C
it was a hedge fund I think.
Posted on 2/10/09 at 5:38 pm to Colonel Hapablap
quote:
it was a hedge fund I think.
can you link to the chart, google ain't helping me
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