You may need a subscription to access this article. One of the funds mentioned is the Marketocracy Masters 100 (MOFQX). The author was very blunt in saying why this is a bad fund. Marketocracy is a web site that lets anyone have up to ten paper portfolios. Marketocracy has the one mutual fund and I believe they would like to have others based on the ability of its members to construct portfolios.
Morningstar rips on this fund as having too much expense due to a lot of turnover and Morningstar contends that the amateur managers are not as good as professionals.
Comparing the fund to SPY and IWM bears out what Morningstar says. Some how the fund was down what looks to be 20% in 2004. That kind of lag is very substantial.
Personally I like the concept and I have to admit I am surprised that the fund has done so badly. I may have it upside down but I think the people that apply themselves and can spend the time should be able to get returns reasonably close to what the market is doing. Keep in mind I am saying people that have the time and I am saying keeping close to the market not putting up Bill Miller numbers.
So maybe the world isn't quite ready for this type of fund. More seriously, I guess keeping close to the market is not as easy as I might think.
1 comments:
Roger:
There are stil a lot of investment clubs. While you have to chose one you feel comfortable with the pooled holdings let people create something close to a mutual fund. And there can be specialization, some people like to find potential investments, others prefer research. This kind of thing can be done across the web though I don't know if it's happening.
You really don't want something that is to massive. It is very difficult to cooridinate a large organization. At best a huge crowd will average out to herd expectations, but one big danger is that low level manipulators arec willing to take on multiple identies to push or destroy certain stocks. They do this constantly on Yahoo finance groups where people don't know where someone is or where they are coming from. And many do it addictively, as a game, they have no money invested, they just want to play with minds.
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