randomep

lol. This thread reads like a bill of rights of managers of opm. If you read some of the comments, it's all the fault of the investor. Not leaving the money in the hands of the manager for a long time, being fickle minded, demanding annual performance for paying annually etc. Them poor souls need saving from selling and buying the index at the wrong times. The biggest joke is name dropping Buffett partnership from 50 years ago. It doesn't matter that Buffett wound up the partnership for some of the same reasons as Tilson today. Buffett was early even then. His investors would have lost money had the partnership continued. Denial does last a long time. ;) I just have never seen a fund manager who is beating the market say that investors shouldn't compare them to the market. Is investing in a hedge fund less risky than a index fund? who knows I guess. I think that's part of the problem of the modern day fund manager. Marketing is probably even more important than performance. Look at Paulson. The guys had a handful of years since the crash of -20% up to even -45% type years. He's still "The guy who made a fortune shorting the housing bubble". When guys can literally pull in assets worth hundreds of millions in fees after a few years of beating the index, I'd guarandamntee that guys marketing material is guys to start calling him "The guy who beats the market". Which is why it's dangerous to rely on a manager. Very dangerous to be lazy in your vetting of a money manager. Guys that are humble and honest are rare. So I'd say it's moreso up to the individual to find a manager or a strategy that is a good fit. I agree with you on Paulson, he got burnt on Sinu Forest as well, on the flip side Burry did the same trade and had only one year of underperformance (I think) and it was 2007. He was attacked by investors after outperforming for 6-7 prior years by a wide margin which I think is ridiculous. Its a case by case basis. I think the conclusion we can draw from this is that you cannot depend on anyone but yourself. Someone here said you have to be vigilant when hiring someone to manage your money. You have to ultimately make a judgement on who to hire and how much to give them. Even if you buy a index fund, you are probably going to get different advice as to what index fund to buy if you live in europe or USA. So there again, you have to make a decision what index to buy or whether to buy index at all. You cannot push the ultimately responsibility to anyone but yourself.....

Ya I would love to hear some specific examples from the early 2000's.

If I was looking for a CD I would go to bankrate.com and look at the savings/check rate averages which is prominently on the banking home page. If someone offered me 0.1% I would say that sucks compared to the average. make sense? Every investment type must have a benchmark. If I was considering an hedge fund investment I would look at a equity benchmark. I have to compare apples with apples and oranges with oranges. If S&P 500 is not a good benchmark then give me another. As for your investment guru Pabrai, he himself on his annual lettters to LP, shows a performance graph with his funds and the S&P500 and DJIA and Nasdaq! I mean sure he and you would defend his recent performance because he is a HEDGE fund. I can concede that but when Pabrai was killing it in 2007 did he mention that benchmarks are not a worthy or meaningful comparison? And you said Pabrai sticks to his principles? Please tell me what is his investing philosophy (other than his great character, integrity etc), there have been several discussions about what is Pabrai's investment style and I am still stumped.

Prasad, Mohnish, is certainly impressive in that he had the integrity to make his clients whole: + 6% / annum after 10 yrs. However, 6% return in 10 yrs is a 80% gain, the S&P 500 TR has return more than that in 10yrs, so as you said, he made a profit something like $8M above expenses, all for lagging the S&P500 TR. Just want to clarify things for real...... thanks

wow! how much did he manage at the end? found the answer: $75M, if he takes 2%/per year that is still $1.5M per year

wow! how much did he manage at the end?

I think crafting unearned wealth inequality as inheritance is a bit misleading. For example, one could say that Bill Gates is self-made; he received no significant inheritance and went into an industry completely different than that of his father (attorney.) But one could also argue that his parents have a huge impact on his trajectory. His parents even paid for a prestigious, expensive private school that had a computer in the 70's (which was insane at the time.) Bill's father even wrote a book on parenting. As for myself, I sometimes think about how much of "me" was baked in many generations ago. I had parents that were upper middle-class, purposely moved across town to get me into the best public school system in my city, always came to my sports games, spelling bees, etc. Their parents were educated immigrants from Germany who could claim to have come to the US with nothing in their pockets (true) but were also quite educated for their day in Germany (also true.) When I think of wealthy inequality, I don't think of the Rockefellers. I think about all the children today that have a really strong headwind while I had a strong tailwind. I agree with this post completely! It isn't monetary advantage that sets people apart. It is the pride of your identity that sets people apart. The implication that money somehow gained in the 1800's can have an effect on the wealth distribution today is just insulting to everything we do, why the heck should I even try to invest, save money, go to college if I am pre-disposed to be poor like my ancestors from their 3rd world country. Our society creates financial windfall to those who do not have smarts and financial savvy all the time. Just think of how much money goes to professional sports. The biggest expense in pro sports is labour costs. If all that money concentrated on a few can be used like Picketty says, then we would have many many more african america billionaires today. I read 60-75% of NBA and NFL players go broke a few years after retirement. It is ridiculous how some NBA players can blow $100M in career earnings. If the athlete's way of thinking towards money is indicative of their community or their identity group no amount of socialism can change the wealth distribution for these people. Sure some in the ghettos can become billionaires always but socialism won't change where the rich come from.

Avg wage in 1944 was $2400 & he was well on his way. Didn't he have some side hustles not reported here? How the heck does a 14yr old earn 1/4 the average working class wage by delivering newspapers, I delivered papers and it was a pittance.

My guess at the single most important trait: empathy.

#11 GDP per capita. So you are implying there are 10 more desirable places to be? I looked up those countries: Hong Kong, Litchenstein, Macau, Manaco?? These are not countries, they are small towns. The largest countries I found are Norway and Switzerland...... those two are the only real countries in my book. To be only beaten by Norway and Switzerland is pretty impressive, no? If it's small it's not relevant? How American of you :) I'm sure the Irish are glad to hear they are not a real country. There is a reason why I added per land area as well. If you have a large sparsely populated area, their income potential (farm land) is higher than a small densely populated area. This should be taken into account. Overall I would not ignore the small countries, I would ignore the ones with a lot of oil as a natural resource (which includes Norway). Then have a look at both GDP per capita and GDP per land area, maybe combining both. You notice on my profile that I am Canadian? The fact that a small sample size is less statistically significant is self evident. If you have a small town of 100 people and 10% are millionaires, it doesn't mean that town has a great school system that churns out talented people. To achieve so much for a country of america's size is incredible. Look at it another way, I guess there are 100 countries of Norway's size or smaller. Say there are 20 countries of America's size. So Norway and Switzerland are top 2 percent but america is top 5%, thus America is more impressive. Considering America has same wealth as Norway. Land size isn't the gift to the people it is the resources under the land and norway's case from its waters. I can argue much of norway's wealth comes from its natural resources such as oil.

#11 GDP per capita. So you are implying there are 10 more desirable places to be? I looked up those countries: Hong Kong, Litchenstein, Macau, Manaco?? These are not countries, they are small towns. The largest countries I found are Norway and Switzerland...... those two are the only real countries in my book. To be only beaten by Norway and Switzerland is pretty impressive, no?

This is CoBF after all. So I suppose WEB is a naive idiot? I am also naive for believing that there is no better time and place to live than now in america or some other free developed country. Bankruptcy is just a word. In this day and age an american with cancer may go bk but he will still have higher expectancy than virtually any other time or society. Bankruptcy simply means you lose your possession while saving your life. And bankruptcy in america isn't all that bad. You get plenty of food stamps social support to get through better than 1/2 the people in the world. Not to mention if you are healthy you can easily start over....... look at Lance Armstrong.

CoBF is the reason we have no market crash in last 7 years! 8) Sanjeev did it. You're welcome! Actually if Mobius is saying that, then do the frickin' opposite! One of the highest profile and worst investment managers of all time! Cheers! He is a bad manager? If I read that without knowing who said it I would've thought it is the stupidest comment I have heard in a while. Now that is consistent given the brains of the speaker.

What do you mean we create nothing???? We make tar sand oil, maple syrup, to name a few things :P

This is the key aspect of learning from others mistake that we so often here. Be brutally honest, describe the activity and analyze the outcome. These guys made a bet on certain companies. The outcome is that they blew up. What happened? I see 2 explanations. 1. these guys were hit by a once in a hundred year storm 2. they guys f*cked up in their analysis and made the wrong bet or the sized their bet wrong With so many people making the excuse of 1) I can dismiss it because it is by defintion a rare event. So that leaves 2. Why did these guys all pick these losers that blew up in a raging bull market? Many of these guy imply or claim they are value investors. The king of value is WEB and/or Graham. Would these guy approve of making a bet on a commodity producer that is setting up a new plant and hasn't yet demonstrated anything? WEB is not a diversifier, if he had a small portfolio he wouldn't hesitate to bet on one or two things with all his money. He said he would've put all his money in the Washington Post in the 70's. But what is the Washington post? It is a company trading for much less than its assets. And those are hard concrete assets. He said he would find bidders for the Post's assets if he was in an island in the middle of the Atlantic. That's the kind of risk profile you would bet 50-100% of your money. On a scale 1-10 scale of risk the Post is 1, and Horsehead is a 8! You should size it at 0.5% if you were a value investor! Many of the guys OP mention are gamblers (with other people's money) in my book. The key is from what I read about their process. Pabrai says he buys stocks that he thinks will double in 2-3 years. Those companies that try that do exist, but the risk profile of those companies that I find is unacceptable to me. Maybe there is someone like a young WEB right now who can find those companies with acceptable risk. But he is not Pabrai because I read his explanation for the Horsehead blowup and I think he is either BSing his clients or he is in denial. I am a average joe engineer in silicon valley. I break my back to make a few bucks and I save it hoping it will grow to make me comfortable. I consider my portfolio to include all of my net worth. I cannot afford to take a huge decline in my net worth because I don't have the energy or the time to replace it with my labour. I manage my portfolio and sure I'd like 20% returns, but I never lose sight of the fact that I need to firstly safely return 8-10% over the long term. By long term I mean 30+ years. I don't think you can stick with a guy like Pabrai for example for 30yrs and beat 8% per annum. Someone mentioned Yacktman and I also can think of Bruce. These guys I think can probably return 2% over the market over 30yr (and Bruce fund has). Because these guys know they are mortals and act accordingly. Other the other hand I see someone like Ackman, someone on this forum says they have a special edge and don't bet against him. edge? What significant edge can he have or did he have when he picked VRX, Target or JCPenny? Ackman is 30 IQ points higher than me but in the hedge fund world, that is not that special. But he makes these enormous bets. I am not looking at his results. I am looking at his thought process. I followed his presentations on Herbalife and I am scratching my head, you are betting how many billions based on that? anyway.... that's how I see it and this is the end of my rant.......

Bought MO in 2000, I have sold about 1/2 I guess. It is now: MO PM KHC and MDLZ with reinvested dividends I think it is around 1200% in 17 yrs for a 16% annual return.

You didn't address the biggest question on my mind. How much capital did these guys start with. 30% in 10yrs is 14x. So ...... starting with just $200k is going to be $3M. It can tell us a lot about their mentality towards concentration.......

Wish I heard of him earlier.... everything that he picks is a great short!

This is complete nonsense. Excusing Trump's election by "PC drove people to the edge" is utter bull crap. At least if you said that white male entitlement drove people to vote for Trump, you might be a bit closer to truth. We should not excuse misogyny, racism, homophobia, nationalism because their restriction supposedly drove someone to the edge. This is what the alt right racists want us to do. We won't surrender. We will not go back to the time when it was OK to denigrate people based on their gender, race, skin color or nationality. And BTW this forum is becoming a swamp of alt right demagogues because of no moderation. I am not EXCUSING anything. I am just try to reconcile the election. Cos I would've never in a million years guessed that Trump could win. Yes we have a lot of pissed off white people in this country. And I was trying to explain why. Calling white people racists is not productive and doesn't help us come to some middle ground where whites and minorities can share power. Trump also got away with misogyny because women are pissed off too. They don't want to vote for educated upper class women who won't help them. The political system that helps minorities, LBGT are in effect taking attention away from the silent majority. If the dems want to win the next election they should take note. This is at least what I learned from the election. Yes Trump is a royal a*hole but hell he can win the election, I learned something from that. It not about right or wrong, its about what works.

I STAND CORRECTED, I calculated 6.96% also

You should compare against the S&P 500 TR return which I estimate is 7.3% over that period.

DTEJD, I understand what you are saying but the way your are saying it and I wholeheartedly agree. I once tried investing my mediocre savings full time after I lost a job..... I lasted 3 months. To me it is a miserable way to live. If I got to that stage again, meaning it isn't really financially worthwhile to work because my savings is great enough AND I hate working.... I would probably become a professional investor for my own money. BUT I would spend 1/2 of my time circling the country playing chess. Investing is just waiting and waiting....... and that is hard!

yes and no. Buffer and Munger have said it is hard and it isn't hard at the same time (although they used different words for hard). It is not hard in the sense that it doesn't take high IQ, or book smarts, or even a computer to beat the index. So anyone in theory can do it. It is hard in the sense that very few people have the wherewithal to apply a theory and wait decades. The not-so-hard to beat the index theory says you just buy good stocks and wait and wait. A reasonable duration to confidently test this hypothesis is say 30yrs. Who can do an intellectual exercise for 30yrs. To do this also requires that the investor does not change his small AUM. You see investors who run small funds with amazing results and get killed as they grow to a big fund and have to invest large amounts of money (cough cough Pabrai) There are people who do this but they are by definition small anonymous investors you don't hear about. In the last year or so I heard of one guy who was a janitor / gas station attendant and died with $8M to his name. He simply invested in good stocks for decades. There are many people like that and if you analyze each of their trades I am sure in the aggregate they beat the market.

I must have missed something ..... how is callousness related to intelligence? We all know we are above average intelligence but who says intelligent people are less callous? Nobody was posting porn or talking about rape.... what I learned but the last US election is that PC can drive people to the edge....... don't let PC rule this forum.....

I'm going to jerk off to that story. Please keep us posted about the next date. TMI