Reader Comment

Sometime last night a reader left an anonymous comment on a very old post. I want to let everyone see the comment and I will try to respond. If I just posted back to the comment no one would see it. First here is the link to the post if you want to read it. Here is the comment;

I find your comment rather arrogant. While I agree that the fees on a mutual fund wrap can be expensive, that does not mean investing in active funds is all that bad. I am sure I could find plenty of open ended funds that have produced higher returns with less standard deviation than your record as an investment mgr. what is your record? Net of fees? Most investors do not have the stomach to invest in concentrated portfolios, they sell low because of fear. And ETFs are index funds, which are the epitome of momentum style investing. The s&p 500 weights whatever is working at the time. If you invested in a SPX etf in March of 2000, you were a fool and bought tons of stocks at bubble prices. Indexing cares nothing about price of a security, it just cares about the mkt cap of the company.

First, if the reader finds the post arrogant I say fair game. I try to share very specific opinions here and while I don't intend to be arrogant, his perception is his reality. He then says he could find plenty of funds that have better records than me. I bet he's right. I don't think I've ever pounded my chest boasting about track record. My benchmark is the S+P 500 I beat about 60% of the time on a quarterly basis. I have said countless times that most managers will both beat and lag the market as time goes on and that I am no different. Where I think I add the most value to clients is having the discipline to stick to the exit strategy I have written about too many times, this was a big help last summer.

The reader says most investors don't have the stomach for concentrated portfolios. I think we agree on this unless he thinks 40 stocks is concentrated.

He also says most investors sell at the wrong time due to fear. That is true. One purpose of this blog is to share what I've got to try to empower individuals to not make this kind of mistake. The market tends to work in a certain way and I try to share my take on how it works. This may not ensure perpetual outperformance but might reduce the instances of emotional mistakes, at least I hope so.

He next says indexing is a bad idea. I have never espoused a Boglesque (I think I just invented a word) blind devotion to indexing. Index funds like anything else are one tool, of many, available to us. The only broad index funds I use are for clients who ask us for ideas for something like a education account or some other small account, but they don't play a role in accounts that I actively manage. The article to which this person posted lays out more specifics on this topic.

In closing I would doubt this reader really understands what this blog is all about. I am still trying to figure if he is in favor of wrap accounts. I will also say, that while I think the reader has missed the point of almost everything I am trying to do here, this is what makes the blogosphere so potentially useful. The reader, I think, is trying to hold me accountable for my opinion. I feel a sense of accountability and responsibility. The primary goal is to share my process. Readers take a little from me, and a little from others and make their own process.