In my time at a long-only asset manager, I was often frustrated at how consultants and other fund selectors will wait until a fund has a strong 3-5-year track record before recommending their clients buy it, only to (as probability and statistics would imply) watch it miserably underperform. Why not set up a consultancy that recommends the *worst-performing* funds of the prior year ... assuming, of course the long-term track record was sufficiently positive to demonstrate that the fund managers were in fact skilled stock pickers? Seems really straightforward ... but nobody does it.
Don't get me started about investment consultants. In my view they destroy more value in the form of missed performance than they create. But when I founded an outsourced CIO business with some colleagues in 2010, we tried to convince pension funds to go against the advice of investment consultants and not choose the funds with the best performance over the last 3-5 years. Guss what, pension funds still stuck with the recommendations of investment consultants because if they didn't and it goes wrong the trustees lose their job. This is why this paper is the most important thing to understand when it comes to dealing with pension funds: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1687660
"No one ever got fired for buying IBM" and all that, one supposes. There's such a massive intermediation infrastructure in place in the world of fund selection (and everyone has mortgages to pay and kids to put through school, so everyone wants his cut), which at the end of the day is less about insight and more about blame-shifting. It's the McKinsey model ... which I've long viewed as "buying a put option on failure" https://despair.com/products/consulting .
I worked with an advisory teaching and helping some of the world's big tech consultancies sell their stuff directly (new business creation). Their consultants, however experienced and however lovely their titles, were completely helpless, they can only sell via networking. Consultants indeed sell therapy.
The Dutch pension fund scheme has a good reputation but it seems that, as p funds (had to) buy more stocks vs bonds during QE, that also meant they bought more crap?
Anyway, now it seems like p funds are becoming semi gov orgs as they have to buy arms manufacturer stock for instance, whose businesses are then propped up by gov investments. Sort of a loop. A least the coming years.
And i’m sure gov coercion will replace p fund ESG objectives as the costs of the green ‘transition’ become clear and p funds will want to choose (more) other stocks.
The future portfolio: weapons; ‘durable’ or perhaps better ‘enlightened’ energy; and healthcare (aging).
And all of that explained on the official gov TikTok channel of course.
Question: The study covers 2013-2017 a period of upward trending markets with very little volatility. How did these influencers perform at the during the downturn at the end of 2018 or during the pandemic panic in 202o or the Fed induced bear market from Jan 2022 to Oct 2023? It would be interesting to see how they fared during difficult times as opposed to good times.
Did you ever see the % of engagement of their posts? Even for a "Chiara Ferragni" is 0,0...%
In my time at a long-only asset manager, I was often frustrated at how consultants and other fund selectors will wait until a fund has a strong 3-5-year track record before recommending their clients buy it, only to (as probability and statistics would imply) watch it miserably underperform. Why not set up a consultancy that recommends the *worst-performing* funds of the prior year ... assuming, of course the long-term track record was sufficiently positive to demonstrate that the fund managers were in fact skilled stock pickers? Seems really straightforward ... but nobody does it.
Apropos your thoights, the much-maligned Jim Cramer on CNBC became so hated for underperforming stock picking https://en.wikipedia.org/wiki/Jim_Cramer#Controversies , that an ETF called "Inverse Cramer ETF" was launched https://alts.co/inverse-cramer-etf-performance-and-holdings/ ... only to eventually shut down https://finance.yahoo.com/news/inverse-jim-cramer-etf-shuttered-140000106.html "Cramer makes a multitude of calls, so deciding which ones to bet against—and when to close those inverse bets—takes discretion. In other words, even if it’s the case that Jim Cramer is a bad stock picker, the sheer number of calls he makes and the speed at which he shifts gears makes it difficult to devise a repeatable blueprint for betting against him."
So the secret to success appears to be "you can't dazzle them with brilliance, baffle them with bullshit" ;-)
Don't get me started about investment consultants. In my view they destroy more value in the form of missed performance than they create. But when I founded an outsourced CIO business with some colleagues in 2010, we tried to convince pension funds to go against the advice of investment consultants and not choose the funds with the best performance over the last 3-5 years. Guss what, pension funds still stuck with the recommendations of investment consultants because if they didn't and it goes wrong the trustees lose their job. This is why this paper is the most important thing to understand when it comes to dealing with pension funds: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1687660
"No one ever got fired for buying IBM" and all that, one supposes. There's such a massive intermediation infrastructure in place in the world of fund selection (and everyone has mortgages to pay and kids to put through school, so everyone wants his cut), which at the end of the day is less about insight and more about blame-shifting. It's the McKinsey model ... which I've long viewed as "buying a put option on failure" https://despair.com/products/consulting .
I worked with an advisory teaching and helping some of the world's big tech consultancies sell their stuff directly (new business creation). Their consultants, however experienced and however lovely their titles, were completely helpless, they can only sell via networking. Consultants indeed sell therapy.
The Dutch pension fund scheme has a good reputation but it seems that, as p funds (had to) buy more stocks vs bonds during QE, that also meant they bought more crap?
Anyway, now it seems like p funds are becoming semi gov orgs as they have to buy arms manufacturer stock for instance, whose businesses are then propped up by gov investments. Sort of a loop. A least the coming years.
And i’m sure gov coercion will replace p fund ESG objectives as the costs of the green ‘transition’ become clear and p funds will want to choose (more) other stocks.
The future portfolio: weapons; ‘durable’ or perhaps better ‘enlightened’ energy; and healthcare (aging).
And all of that explained on the official gov TikTok channel of course.
Question: The study covers 2013-2017 a period of upward trending markets with very little volatility. How did these influencers perform at the during the downturn at the end of 2018 or during the pandemic panic in 202o or the Fed induced bear market from Jan 2022 to Oct 2023? It would be interesting to see how they fared during difficult times as opposed to good times.
No idea but I bet you a lot they fared even worse than in 2013-2017