Star Trek (Next Gen): Jean-Luc Picard
A growing number of folks are becoming aware that the performance of most mutual fund managers over an extended period does not exceed that of benchmark indexes such as the S&P 500. More specifically, 99.6% of all mutual fund managers failed to beat (i.e., only 71 funds out of 17,785 matched or beat) the performance of the S&P, net of fees, over a ten year period according to data compiled from the Mutual Fund Screener of The Wall Street Journal. Please reference the entire article titled “Wall Street Is a Rentier Rip-Off: Index Funds Beat 99.6% of Managers Over Ten Years
” at the blog Of Two Minds
Talented investors are often not managing formal, traditional funds but rather managing one’s own accounts or a small number of accounts (e.g., friends and family). These individuals are more likely to fit the mold of idiosyncratic entrepreneurs or founders of technology start-ups.
Nevertheless, one of several takeaways is “don’t judge a book by its cover.” In other words, just because a money manager is nicely dressed, displays stereotypical good credentials, and has friends in high places (partly enables said manager to either procure capital or secure the fund management role), shouldn’t imply an above average talent for investing. One can present a similar case against most (not all, of course) hedge fund and venture capital fund managers, as highlighted in two Zero Hedge
articles titled “Most Hedge Funds Underperforming The S&P 500 For Fifth Year In A Row - Full YTD Performance
” and “Venture C(r)apital: Myth And Reality
According to Thomson Reuters and the DealBook
, edited by Andrew Ross Sorkin of the New York Times, the pace of worldwide M&A during the first quarter of 2013 was relatively slow. The summary, highlighted below, reflects announced transactions and ranks them by value. Goldman Sachs is on top of Thomson’s League Tables in both number and value of announced deals in the quarter.
For those who want a free, interactive graphic regarding investment banking activity, then reference the Investment Banking Scorecard
compiled by Dealogic and the Wall Street Journal.
And, lastly, for a comical perspective on League Tables, spend a few minutes to read The iBanker’s blog titled “Lies, Damned Lies and League Tables.
” The art of presentation, however, is nothing new to bankers and the most discerning clients.
Yankees, Retired #8
As Yogi Berra
once quipped, "a nickel ain't worth a dime anymore." Below is a chart from the Wall Street Journal and Bloomberg News depicting the purchasing power of a dollar using a Starbucks Latte. It's probably easier to find the source link from a related post by ZeroHedge titled The Starbucks Index - Coffee Price Parity
(27 Feb 2013).
Cover of Issue 9; Published 2002
You can find the comical article titled The Middle Manager’s Oath
written by Christopher Mah at McSweeney's
, a magazine founded by editor Dave Eggers
, the Bay Area Bard.
For those who are not aware of Eggers, he wrote the popular book A Heartbreaking Work of Staggering Genius
, among others. He also founded a couple of nonprofit organizations based in San Francisco: 826 Valencia
, a tutoring and literacy organization in the Mission District neighborhood; and, ScholarMatch
, a program that matches donors with students needing funds for college tuition.
Below are a few extracts from the article:
"I will challenge my team to solve the problems I unnecessarily created for them."
"Jargon is not meaningless as long as it is strategic, measurable, and scalable."
"I will become diabolically drunk with the slightest sip of power."
Yuan Dynasty Banknotes (circa 14th century)
Let's end the year with some humor from The Daily Capitalist and its recent post titled “Top Ten Reasons Why Fiat Currency
Is Superior To Gold (Or Silver) Money.”
The Top 10 Reasons are below; the commentary can be found at The Daily Capitalist
Number 10: There Is Not Enough Gold (Or Silver) In The World To Serve As Money
Number 9: Gold And Silver Are Old-Fashioned, Cumbersome Money
Number 8: Gold Restrains Growth
Number 7: The Gold Standard Caused The Great Depression
Number 6: Rules Can Be Broken
Number 5: Gold-Backed Money Favours The US Versus The Rest Of The World
Number 4: Gold Favours Gold-Mining Countries Over Others
Number 3: Gold Favours The Rich
Number 2: PhDs Know What’s Good For Us
Number 1: If Given A Choice, We Would All Prefer Fiat Over Gold-Backed Money
Samuel L. Clemens stamp, 1940
November 30th is Mark Twain
's birthday, which makes me think of some of his witty quotes
such as this one:
“It could probably be shown by facts and figures that there is no distinctly native American criminal class except Congress.
Keeping that quote in mind, the webcomic xkcd
has a fine infographic cheat sheet of the economic vortex appropriately titled “Money Chart
.” It's available in a wall poster, which could make for a unique holiday gift for any finance geeks
among you. Also, Chris Turner, a sustainability blogger and author wrote a short article
referencing a few interesting sections of the diagram such as cost externalities of electricity (upper right corner; coal).
Eclecticism in Architecture
Below are links of an eclectic variety. Woolly Mammoth to Be Cloned
– Discovery News
Within five years, a woolly mammoth will likely be cloned, according to scientists who have just recovered well-preserved bone marrow in a mammoth thigh bone. Japan's Kyodo News
first reported the find. A Government Censors a Blog
Be thankful for your liberties and freedoms, as some governments secretly censor information (in this case, a blog) without apparent due process.Expose an Alleged Financial Crook and be Fined Millions
– Seattle Weekly
Apparently bloggers need to be careful writing about crooks and ponzi schemes. The unintended consequences of the Court's actions will likely be more anonymous, offshore blogging. Aunt Midge Not Dying in Hospice Reveals $14B Market
When private equity firms salivate about for-profit hospice investments, what is the probability that Medicare (i.e., taxpayers) is being pillaged and plundered? Stephen Hawking on Time Travel
- Letters of Note
This one is short and comical.
It's easy to beat "sophisticated" investors
- Amazon.com is experiencing shrinking margins, increased R&D expenses, and decreased efficiency. Can anyone say Layoffs and Stock Price Haircut?
- Remember Whitney Tilson? He went short Netflix when the stock exploded higher. Now, Tilson explains why he went long Netflix as it continues to behave like a falling knife. He insists he "Hasn't Lost His Mind."
- Again, most (let's say 98%) of professional investors such as mutual, hedge, venture, private equity, and institutional (pension, endowment, etc.) fund managers are effectively incompetent. They prefer the euphemism of “having a bout of negative alpha,” by the way. Monkeys need to be given more consideration, apparently.
- Jon Stewart's extended interview with the GOP candidate who is often ignored by mass media. You know, Ron Paul, the guy with a credible plan.
- Are Californians or New Yorkers happier? That’s just one of the questions cognitive psychologist Kahneman addresses in his new book, “Thinking, Fast and Slow.”
- It makes one curious why the Occupy Wall Street movement doesn’t have a laser focus on two institutions: the FED and the Congress. The snickering from abroad you hear are from the youth of Cairo, Tehran, Athens, and other places. Here’s one former hedge fund manager’s perspective on the movement (in San Francisco).
- Piggybacking on the trades of activist investors is not without peril. According to AlphaClone, here are the average annual returns one would have generated by cloning the portfolios of a few better known managers such as Barry Rosenstein’s Jana Partners (13.5%), Daniel Loeb’s Third Point (8.9%), and Bill Ackman’s Pershing Square (4.3%). Not impressive.
New York Stock Exchange; 1882
Below is an extract of a cease and desist letter mailed
to TPM Media LLC (dba TPMMuckracker) regarding its writing about the NYSE and using a photo depicting the exchange. A full summary can be read on Reuter’s blog, Felix Salmon: A slice of lime in the soda
or at Wired.com
. NYSE has common law and Federal trademark rights in and to NYSE’s name and images of the Trading Floor… Moreover, NYSE owns Federal Trademark rights in one depiction of the Trading Floor and common law rights in the Trading Floor viewed from virtually any angle (collectively, “Trademarks”). Accordingly, NYSE has the right to prevent unauthorized use of its Trademarks and reference to NYSE by others.
Apparently some ignoramus is using NYSE letterhead and signing Chief Counsel Kendra Goldenberg’s name to stupid letters.
Correlation by xkcd, a webcomic
Oh, the age-old correlation-implies-causation
argument.Please reference the blog titled
"How to Spot Advocacy Science: John Taylor Edition
" posted yesterday by Freakonomics. It depicts charts prepared by Stanford professor John Taylor and acknowledged by Harvard professor Greg Mankiw (who also linked to the charts without a word about their veracity...until others publicly did so - including Krugman in his blog titled
"What’s Behind Low Investment?"). Perhaps these two economists, and like-minded peers, will author a book titled "Predictably Disingenuous."