Unsustainable Capitalism

[Scanner]

Oh, I don't know. . .there have always been people chasing the hot fund. I don't think that's any more prevalent nowadays than it used to be. There are people out there with 401(k)'s who pretty much don't tweak matters.

Don't you think there are a core of investors out there who at least look at the Morningstar rating and 10 year performance and stick their money there and probably hold?

I mean, I am no stock picker by any means, but I think if the job landed in my lap as a fund manager, and let's say I was running a Blue Chip Fund, I would probably start with the S&P 500 Index and then maybe trim off 10-15% through research and insider information. Maybe add a few out not in the index but qualified as a blue chip co.

And then let it ride for the most part, tweaking holdings here and there throughout the year, I guess, but not much.

I mean, isn't that what an active fund manager is supposed to do? At least I always thought that.

Maybe it's something that needs to be listed right up there with performance - turnover rate.

I would think a researcher could correlate turnover rate with performance/fund manager and we could fire the ones that do and don't perform, nothing personal, right?

I mean let's say you had 4 managers:

KV: Turnover rate: 80% Performance: 10%
Scanner: Turnover rate: 50% Performance: 10%
Disneysteve: Turnover rate: 10%: Peformance: 15%
BJ: Turnover rate: 80%: Performance: 20%

We kind of know who to fire, no?

[GREENBACK]

I thought Al Gore was just a fictional cardboard cutout

[kv968]

I mean, I am no stock picker by any means, but I think if the job landed in my lap as a fund manager, and let's say I was running a Blue Chip Fund, I would probably start with the S&P 500 Index and then maybe trim off 10-15% through research and insider information. Maybe add a few out not in the index but qualified as a blue chip co.

The sad part is a lot of funds are really no more than just that...basically an index fund with a couple of other stocks thrown in. Yet you get the higher expense ratio for those "extra" stock picks

[ecoadapt]

Well, I admire Al Gore for trying to do something about it, although this may even be beyond the Great Lord Al Gore's capabilities after inventing the internet .

I also admire Al Gore for trying. Indeed it's beyond his capabilities!

If I want to trade, I'll trade.

That's a good point!!

[Scanner]

The sad part is a lot of funds are really no more than just that...basically an index fund with a couple of other stocks thrown in. Yet you get the higher expense ratio for those "extra" stock picks

Well. . .one of those stock picks (or sells) could mean a lot.

I heard one of dem dere fruit companies did good back in the 80's and 90's

[kv968]

Well. . .one of those stock picks (or sells) could mean a lot.

I heard one of dem dere fruit companies did good back in the 80's and 90's

And with the expense ratios some of these funds charge, that stock pick better mean a WHOLE lot

[vips]

I think, Capitalism is not so easy as it should have support of banks, financial market and government. But in these days it became very difficult as people are diverting towards trading and such financial resources. So it may become the end of Capitalism.

[Ochayebeers]

As regards portfolio turnover, this is usually disclosed in the UK so you can avoid active funds that make too many trades.

We call them "closet trackers" because they just hold the biggest companies, anyone could just use Vanguard for that.

Having said that there are some (usually smaller) funds that have concentrated (say 40 holdings) portfolios that don't trade often and do quite well. If your advise can identify these then you can do much better than a tracker investor. We call these "bottom up" or "stock-picking" funds and in my opinion these are what actively managed funds ought to be about.

Examples could be McInroy & Wood Balanced or MFM Slater Growth. Not sure if the IRS will let you guys access those but I'm sure there are US equivalents.

Cheers,

Les