At 19:30 27 November 2005, wrote:
Your comments are exactly on point. If you could really
teach investing
to all of those MBAs everybody investing in the market
could only earn
an average return because market intelligence is evenly
distributed. Of
course this is not the case; funds managed by business
school graduates
have returns all over the map. My goal is to identify
those managers
who CONSISTENTLY beat their peers. The Contafund has
a 10 year
compounded rate of return of 12.4%, beating the S&P
500 by nearly 3%.
Perhaps BB ought to ask Will Danoff (the fund manager)
to lecture his
class; I think they would learn a lot from him. Will,
btw, has an MBA
from Wharton.


That's certainly true but not my point. I don't believe
that markets are 100% efficient, particularly in the
emerging world. My point was that 'past performance
is not a guarantee of future returns'. ContraFind
had two good years in the dot-com bust that made them
most of their superior 10-year return versus a simple
index (with very low load). The question is, does their
investment philosophy or market / company information
allow them to kick back into superior performance in
2006?

This is true of investments in general. Hedge funds
in particular use various philosophies that try to
play anti-correlated market relationships to improve
the returns at any given risk level. Some of the relationships
hold for a few months, some for a few years and some
get arbitraged away just because the investment philosophy
gets popular and bids the returns away.

If you've gotten rich from your ability to sort out
which historically successful investment philosophies
have legs left and which are played out, more power
to you. At least you needn't worry about how much gliders
cost.

9B