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#11
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How to Buy a Glider Afordably, or Euro vs ContraFund
I see you guys need to take in course in Investing 101.
"Chasing returns" means buying a fund that is the top category performer in a given time period, be that a month, quarter, or year. Then, at the end of that period, you sell that fund and buy whatever is the new top performer. I, on the other hand, find fund managers (note that I didn't say "funds") that are consistently in the top 10-20% of their peers over a long period of time. In the case of the Contrafund they have been in the top 20% for a 10 year period. This does not happen by luck. And I don't think they were THE top performer in any of those years, but that is unimportant to me. Rarely do I have to dump a fund that has been a consistent performer in the past, but it does happen. I am a long term investor, a bad quarter or two can be overlooked. Your complaint about the expense ratio shows you haven't done your research: the Contrafund is one of the cheapest in its category, which is 1.26%. Believe it or not, but you have to pay these guys to manage your money. Perhaps you are independently wealthy and work for free, but I have no idea. Tom |
#13
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How to Buy a Glider Afordably, or Euro vs ContraFund
Boy, this is a tough crowd. Just what part of 20% don't you like?
My strategy is DEFINITELY NOT "chasing returns", but you probably wouldn't understand the difference even if I explained it, so I will skip it. You realize, of course, that ALL mutual funds charge fees? What do you think, that they work for free? Do you even know that the performance figures already include the fees? Your reply rings of sour grapes to me. Exactly what is your strategy for investing your money for the next 12 months? Please don't say you'll stick it in a mattress! Tom |
#14
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How to Buy a Glider Afordably, or Euro vs ContraFund
BB wrote:
In the business, we call this "chasing past return", an investment fallacy sort of like setting the MacCready value on the last thermal. The catch of course is if that they don't stay in the top 20-30% of peers, you've already lost your money. Mmmm. Perhaps an imperfect metaphor. McCready theory says to set the ring to the expected thermal strength for the day and FLY THE WHOLE DAY ON THAT SETTING! Luckily, most of us modify theory with experience as we go along or I'd have done a lot more outlandings. I know 'buying proven performers' is imperfect but, like Churchill said about democracy, it's better than the alternatives. In a world where you can actually pay good money for advice to buy the failures, Tom's ideas are at least not obviously irrational. Go Tom. GC I looked up contrafund just for fun http://quicktake.morningstar.com/Fun...A&Symbol=FCNTX Looks like they made one good move in not losing as much as the average 2001-2003; other than that they track large cap growth pretty perfectly. And they charge a hefty 0.92% expense ratio! John Cochrane BB |
#15
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How to Buy a Glider Afordably, or Euro vs ContraFund
M B wrote:
misc.invest or misc.invest.funds or misc.invest.misc might be a good place to post these comments and get some more relevant feedback. No. I'm enjoying it and learning. Like Tom, I have to buy my gliders from investment income. GC Happy Thanksgiving! At 08:30 26 November 2005, wrote: I see you guys need to take in course in Investing 101. 'Chasing returns' means buying a fund that is the top category performer in a given time period, be that a month, quarter, or year. Then, at the end of that period, you sell that fund and buy whatever is the new top performer. I, on the other hand, find fund managers (note that I didn't say 'funds') that are consistently in the top 10-20% of their peers over a long period of time. In the case of the Contrafund they have been in the top 20% for a 10 year period. This does not happen by luck. And I don't think they were THE top performer in any of those years, but that is unimportant to me. Rarely do I have to dump a fund that has been a consistent performer in the past, but it does happen. I am a long term investor, a bad quarter or two can be overlooked. Your complaint about the expense ratio shows you haven't done your research: the Contrafund is one of the cheapest in its category, which is 1.26%. Believe it or not, but you have to pay these guys to manage your money. Perhaps you are independently wealthy and work for free, but I have no idea. Tom Mark J. Boyd |
#16
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How to Buy a Glider Afordably, or Euro vs ContraFund
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#17
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How to Buy a Glider Afordably, or Euro vs ContraFund
Whatever he's teaching, it AIN'T INVESTING!
Investing involves putting your money at risk for potential gain. Let me repeat, YOUR MONEY, not someone else's money, YOUR MONEY! Everytime you make a mistake, YOU feel the pain, not someone else. BB shows clear ignorance of basic investing fundamentals. I'm sorry, but that is the way it is. Tom |
#18
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How to Buy a Glider Afordably, or Euro vs ContraFund
Andy Blackburn wrote:
Maybe you don't know that BB TEACHES Investing 101, and 202, and 303, at arguably the finest graduate school of finance in the country. I suspect Tom picked up that little point because: a) BB said "in the business..." b) He read BB's email address (...gsb.uchicago.edu) c) There was a definite note of authority (condescension?) about how he came to grips with Tom's thoughts on investment. I thought the difference was that Tom was risking his own money while BB taught people who (largely) intended to earn a fairly secure living investing other people's. Tom wants to get GOOD returns. I'd guess BB teaches that anything above average is pretty much only luck. Maybe you'd like to rear back and call all those Nobel Prize winners ign'rent too. No. But if you're aiming to make money instead of just not losing it, maybe them Nobel folks aren't all that relevant. Making money is as much art as science. If it were otherwise it'd be impossible to staff graduate schools of finance. Best regards, GC |
#19
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How to Buy a Glider Afordably, or Euro vs ContraFund
At 09:48 27 November 2005, Graeme Cant wrote:
I thought the difference was that Tom was risking his own money while BB taught people who (largely) intended to earn a fairly secure living investing other people's. Aren't you giving your money to the latter? Are you saying in addition one should only pick fund managers who didn't study finance, or what exactly? But if you're aiming to make money instead of just not losing it, maybe them Nobel folks aren't all that relevant. Making money is as much art as science. I'll stick with science. The Wall Street Journal regularly puts the 'artists' up against a dart board (or more recently a gorilla) over the course of a year - guess who wins? When I was a student, one of the school's Nobel-winning finance guys was interviewed by an editor from a business magazine. He was asked, 'If you guys are so smart, how come you're not rich?' He answered, 'Many of us are.' But hey, it's your money so whatever makes you feel good. ;-) So... I think the practical advice we've gotten out of this - as applies to glider pilots - is: 1) If you have a glider on order, put your money in the ContraFund instead of any other stock or bond fund or any individual stocks, because the ContraFind will continue to outperform 75% of stock funds over the next year (net of fees). 2) Don't buy Euros now, because Euros are definitely getting cheaper over the next 12 months. I think those were the basic points. Maybe it'll turn out to be good advice. 9B |
#20
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How to Buy a Glider Afordably, or Euro vs ContraFund
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. Tom |
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