Many, if not most, people pick their investments based on recent returns. And that’s a huge mistake. Consider this data: On March 31st, 2012, there were 2346 domestic mutual funds. One year later, 1173 funds (half) had placed in the bottom 50% of performance, leaving the other 1173 as “winners”. If past performance is indeed indicative of future results, we would expect those 1173 “winners” to continue winning. They don’t – not by a long shot. By March of this year, only 43, or 3.7%, continued winning. For those 43 funds, while a five year streak of staying in the …
You Want The Truth? Here It Is
We’ll just say it. Most financial advisors – or brokers, or agents, or wealth managers, or whatever they call themselves – are either crooks, incompetent, or both. After over thirty combined years of doing this, we’ve seen it all, from advisors who don’t understand basic investment theory, to outright fraud. Luckily, there are very few Bernie Madoffs. The majority of offenses are subtle, usually go unnoticed by the client, and are detrimental over the long term – when it becomes too late to fix it. And the subtlety extends to both incompetence and crookedness. If we all gathered around the …
A Lesson in Objectivity
Imagine your doctor tells you that she won’t prescribe the best medicine that exists for your illness, as the company which produces the medicine refuses to kick her back a few dollars for writing the prescription. Rather, she prescribes a pill that doesn’t work nearly as well, but for which she’ll receive a kickback. Whether you live or die, well… While you certainly wouldn’t accept this scenario, millions of people are hurt, unknowingly, by the same problem with their investments. Kickbacks in investment products, euphemistically known as “revenue sharing”, are a major obstacle between an investor and the best investment …
What Makes Good Investing? It’s Not What You Think
All else being equal, someone new to investing would likely think that the smarter you are, the more success you would have in investing. The ability to gather, extrapolate, analyze, vet and measure information and data better than the next person certainly gives you a demonstrable edge that manifests in better investments returns. Right? The Wall Street Journal recently highlighted a hedge fund manager who once managed the investments for Harvard University’s multi-billion dollar endowment. Some of the smartest people in the world, working at Harvard, chose one of the smartest investors in the world, Jack Meyer, to manage the …