Wednesday, October 23, 2013

A Link to 10 Pictures That Undermine Active Money Management

I've used thousands of words to explain what's wrong with active money management.  Here is my thesis in 10 pictures:


  1. Ah yes I saw this infographic on another blog and while I do agree largely with the sentiment, I thought they pick some odd examples. In particular saying Buffet has under-performed the S&P in 3 out of 10 years... one could take the same stat and stick it in a pro-active-management piece saying Buffet beats the market 70% of the time. And even Miller - beats market for 15 years, loses for 10. Sounds like he beat the market 60% of the time. And saying his fund was down 54% from 2006 to 2008 is a cheap shot... the DJIA was also down 54% from 2007 to 2009. I just think it would be easier to pick examples of real clowns in the business like John Merriwether rather than those who actually have a semi-decent story to tell

  2. I think the purpose of the Buffet and Miller examples was simply to point out that even the great money managers don't outperform all the time, and in Bill Miller's case, the ride can be very volatile. The first chart makes clear that there is small group of managers who beat their benchmarks.