I think “The Buffett” wants you to call him and share your secrets.

Buffet says "buy some “Eurodollar calls (he wishes that he did).” Never bet against America or the market.

[quote=Indyone]

meno,

I've done that...review my posts.  and yes, I've had the balls to discuss my mistakes also.

You, on the other hand, don't even have the balls to tell us which "top ten" firm you work for.[/quote]

Indy, From reading your posts I find you to be a person of high integrity. I believe most on this board would agree with me. No need to defend yourself from anyone on this board.

That said, I too am skeptical of unsubstanciated numbers. Yet, I accept that there are those among us who have developed stock picking systems that work for them. Some have staying power, most don't. The bigger question, how they get these systems past regulators, who focus on client accounts on an individual basis rather than a portfolio basis? What's right for client A can't possibly be right for clients B, C, D, and F. Yet, all stock picking systems rely on 100% participation in every recommendation to be successful. Regulators have field days when every account in an advisor's book is invested identically. Successful performence doesn't earn a pass. Still, Skee, Meno, and others who have found a way to make this work and have had good years deserve their 15 minutes of fame. Hopefully, for their clients, they can grab the spotlight again next year and for years to come.

[quote=dude]

Skee,

When you say you look into the financial metrics of your screened list,

what are you looking for specifically? Also, where do you screen for your

stocks? Thanks for your reply.

I appreciate that.  I'm just beginning to be sceptical of the trend to wrap people up with a grossly overdiversified and expensive index fund (90% of all wrap programs i've seen) and follow one size fit's all strategic allocations.  Anytime Wall Street comes together in unision to preach that this or that product is the saving grace and we all should line up like lemmings to be baptized in it's waters, I get a little sceptical (admittedly, almost all of my clients are in wrap products since that is all I know and believe it's better than me blowing them up with sh*tty stocks).  So I am just trying to glean wisdom from others who have been around longer than I.  Thanks anyway Skee.

[quote=Indyone]

meno,

I've done that...review my posts.  and yes, I've had the balls to discuss my mistakes also.

You, on the other hand, don't even have the balls to tell us which "top ten" firm you work for.

[/quote]

Give meno a break, why should he have to admit he works for an insurance company? 

[quote=skeedaddy2]

Here's something interesting.  I can't help but get a chuckle reading over a quarterly update from a portfolio manager from Pioneer Funds.

Size of portfolio: over $1 billion

Portfolio manager has an MBA from NYU. and has a "team" of equity portfolio managers and research analysts that support him. Has underperformed his benchmark for YTD, 1 year and 3 years. 4 Stars from Morningstar and 5 stars from S&P Fund Research.

Released a very apologetic update explaining what has gone wrong this year:

Tenet Health---hasn't he noticed that United Healthcare and Humana are kicking butt?

Blockbuster Video--I guess he hasn't heard of NetFlix

Mattel--In the summer? Buy what the Chinese are buying not what they're selling.

SimpleTech--Apple signed the deal with Sandisk.

Perrigo--not enough headlines for Bird Flu, I guess.

Sometimes it not what you know, but who you know.

[/quote]

I'm not a big fund fan, but it sounds like you're bashing a Value manager (those seemed like value names) that stuck to buying value stocks for not becoming a growth manager. You do realize some day it will be a value manager's day again, due nothing at all to his or your stock picking ability, right?

[quote=Indyone]

It looks like you are using a momentum strategy and assuming the accuracy of your posts, it's worked for you this year. 

[/quote]

Exactly. Next year, or the year after when the market isn't favoring momentum names, and he's using the same approach, clients will think he's lost his touch. Just like in the 1990s when Warren Buffet was universally known as a has-been and everyone flocked to Janus funds. Now the Janus managers are has-beens and <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Warren's considered a genius. It wasn't that either group was ever dumb OR genius, it was that the market was favoring a given style at a given time and even stock-picking cab drivers who used (knwingly or not) the "right" discipline at the time were hailed as market gurus.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

That's why when someone tells me their great strategy, I ask if they compliment their growth style (often they don't even know that's what they're doing) with a value style (or vice versa) manager. That’s why I hire and rate money mangers, I haven’t become one.

To each his own, eh?

[quote=dude]

I’m just beginning to be sceptical of the trend to wrap

people up with a grossly overdiversified and expensive index fund (90% of

all wrap programs i’ve seen) and follow one size fit’s all strategic

allocations. Anytime Wall Street comes together in unision to preach that

this or that product is the saving grace and we all should line up like

lemmings to be baptized in it’s waters, I get a little sceptical

[quote=mikebutler222]

You do realize some day it will be a value manager’s day again, due

nothing at all to his or your stock picking ability, right?

As far as index funds, its a mathematical certainty that you will
under perform when you add layers of fees. Where's the value
proposition? I haven' found it.

Good Luck[/quote]

As far as indexes under performing you will not have that problem with (DFA) Dimensional Funds!

You should check them out if you believe in indexing!

When I mentioned index funds, I was alluding to mutual fund wrap programs where each fund has 200 plus stocks in it charging 100 to 150bps, when aggregated (usually 8 or more funds), you've got well over 1000 securities.  It seems to me like a sure fire way to get mediocre performance.  In addition with more money flowing into these programs where the fund managers generally are benchmarked to the index (owning the underlying stocks and over/under weighting) and with more $ flowing into indexes due to fantastic marketing I get concerned that too much money is chasing down the same group of stocks.  Makes me pause a little when recommending wrap programs, although I realize no investment is perfect).  I'm not a defender of index funds per se, just curious as to others opinions.

Peace

We get hung up on beating or not beating the “index”.  We compare verything the the S & P, Russell, Whatever. 



Guess What?  The “Index” is the clients
required rate of return to meet their objectives.  This is
established through Non-Deterministic planning and keeping it up to
date.  You should have tools to monitor the relationship between
the risk and return for your clients portfolio to make sure they match
up.  What you use to fund the portfolio, whether it is indexes,
funds, stocks,  is up to you…just factor you fee in when
attaining their ROR.



 

Right on, Rightway!  Comparing performance relative to an index and/or other managers with the same style is primarily only of significance to evaluating a money manager and, of course, that evaluation must also consider the risk each manager is taking to achieve that relative performance. 

Many, if not most, reps don't try to be money managers -- we use resources to evaluate them to hire & fire them.  The "managers" (be they funds/SMAs for active management, or ETFs/indexes for passive managment) are just vehicles to implement the particular allocation that is appropriate for each individual client's needs.   To say that an index fund's performance is mediocre because of over-diversification (which may or may not always be an accurate statement depending on "mediocre relative to what") is not pertinent when viewed in the context of how that index may fit within a particular client's situation. 

I don't view myself as a money manager & my clients know that.  I know enough to know that I probably wouldn't be as good at it as some on this forum are, or as good as many others that I can hire for clients.  For those reps that position themselves as money managers, enjoy it, & have happy clients because of it, that's great.  It's not a question of which approach is better, as both approaches fulfill a client need.  They're just different.

rightway,

I agree.  Ric Edelman calls that the "individual investor index".

Nothing else matters as long as the client is on the path to reach their uniquely individual financial goals.

Thanks to the couple of guys that complimented me, but most of you guys sound like a broken record. 

I'm obsessed with making money for my clients.  Several years ago, I  met with a prospect who was a self-made millionaire.  After I finished my presentation he asked me how much of my own money was in that stuff I was pitching. Since then, I invest in the same equities that my clients are in.  

The whole problem with our fee based system is an inconsistent compensation for services provided.  We get paid a fee for asset management.  All other Financial planning provided is  either value added (free) or a fee is charged.  If we were to be fairly compensated for investment manager research and consulting, it would have to be for a retainer to be most appropriate.  I'm sourcing this opinion from Worth magazine from the guy who runs Lydian, one of the largest independants out there, who also happens to provide platform services for a lot of indy's as well. 

I tend (the key word is tend here) to agree.  If I'm paid a fee based on AUM and my compensation is directly affected by the performance of the account, it seems that our value (in the minds of the client) is tied to that accounts performance.  If we were compensated to evalutate managers and recommend allocations, do financial planning etc... then a flat fee seems more appropriate.  If we get paid like mutual fund managers do on a % of assets managed then why shouldn't we have to prove our value based on the same guidelines.  When you assess managers you probably gauge them relative to a benchmark? 

I fully understand Rightway, Duke and MeNoTells' point of view, it's just that   I have started to become sceptical of all the financial metrics we use to sell our services, since they are all based on past performance and I don't understand why we can rely on correllations, standard deviation etc...  which are all just as fickle and unpredictable as returns (eg/ international stocks are much more corelated than they used to be).  Even Mr. Sharpe chastised the financial services industry for using the Sharpe ratio incorrectly.  We build these portfolio's making all these assumptions that tommorrow it'll be the same: my bond allocation will go up when my stocks are going down etc...  As any student of capital markets knows, it's when you have a lot of people doing the same thing and subscribing to the same beliefs that a "correction" generally occurs.  If every major investment firm out there is pounding the table on wrap type investing based on the standard metrics used to determine the "correct" balance, maybe some inefficiency is developing that will cause the rules to change down the road? 

I guess I see that every fund company, brokerage firm and Independant is pushing what amounts to being essentially the same investment, benchmarked to the same indices, rebalanced (generally)around the same times (quarterly or yearly) holding (generally) the same stocks.  Maybe we're in the middle stages of a bull market in Markowitz (discovered the efficient frontier for those unfamiliar)driven investing and at some point the bubble will burst?  I guess we might be trend followers in this respect?  Remember, broad social and economic paradigms are the basis for the markets' behavior and inevitably some unpredictable event changes the basis on which broad paradigms are formed resulting in a dramatic divergence of expected outcome.  One size fits all, plug n' play seems to be too ridgid to respond.  Maybe 10 years from now we'll be hammered for charging our clients a fee for mediocre performance and just sitting on the assets (sure I know the argument that we meet with our clients quartlery, send 'em b-day cards, tell 'em they're up by 4% this year, review their plans, whatever) when we should have just charged them a flat fee.  I don't wish to get anyone's panties in a bind, I'm just being honest about some thoughts I've been having.

Peace 

“…have started to become sceptical of all the financial metrics we use to
sell our services, since they are all based on past performance and I
don’t understand why we can rely on correllations, standard deviation
etc…  which are all just as fickle and unpredictable as returns (eg/
international stocks are much more corelated than they used to be).”



Dude-



This is smart thinking.  The Baby Boomers have DRASTICALLY
affected every step of their way in history, the effects were all new
and un-tested.  Why are we to assume their retirement needs will
not take the markets into unkown territory as well?  This is only
1 factor in dispelling the accuracy of MPT and Monte Carlo. 



Fair enough.



If this a position one takes as an advisor, they will need to figure
out how to plan then, and pray it is right (for the sake of possible
Arbitration).  I think nothing is right on, but using the best
tools we have for what we know is the best we can do.  The real
key is mapping the treck of portfolios through the life needs of the
client…ala managing the relationship, plan, and assets for clients
all along their way.  Set it and forget it is gone. 

[quote=skeedaddy] [quote=mikebutler222]

You do realize some day it will be a value manager's day again, due
nothing at all to his or your stock picking ability, right?

[/quote]

Tell me Mike, how will you know when "value" is back?[/quote]

Ahhh, there's the rub. Those of us honest enough with ourselves to know we aren't the Ms. Cleo to the investment world realize we WON'T KNOW until after the rear-view mirror performance data tells us. OTOH, since I ALWAYS have style diversification, I'm not put in the position how having to guess which style will be in favor next.

YOU, otoh, should be asking yourself that question, since your investment style is of a specific and undiversified (style and cap, at least) nature.

[quote=dude]

I appreciate that.  I'm just beginning to be sceptical of the trend to wrap people up with a grossly overdiversified and expensive index fund (90% of all wrap programs i've seen) ....[/quote]

You've been looking at different wrap accounts than I have. I've yet to see a single one that fits that description.