vlogolution network » hedge funds

Which “Expert” Portfolio Manager would you choose?

Alexander P Morris — Tue, 01 Nov 2011 21:46:59 +0000

(Interloper) “Outside of the entertainment factor, the primary differences between the two archetypes is that the first has risen to their position by attracting new money while the latter holds their position by effectively managing money. Type One*, with a travel schedule encompassing 150 days annually is dependent of their model for performance because they have much less time for specific analysis – hence the preponderance of more black box, momentum strategies. They are also much more dependent on their analysts and traders back at the office who must make the majority of the day-to-day decisions. Type Two* on the other hand, only really cares about the analysis. They are pissed when the marketing department drags them put of their cave before they’ve finished investigating a fishy footnote in the last quarterly statement. (Don’t think I’m exaggerating with that, btw. I personally know PMs that will spend weeks on a single footnote).”

“Here’s the important part: the industry loves them some Type One PMs. Momentum managers trade a lot more than value managers and this keeps the trading desk commission train rolling. The accommodating Type One manager is, unbelievably, available for evening functions where Financial Advisors can bring their top clients who, inevitably will be running around with blank checks by slide eight. Everybody makes money.”

“If you’ve read this far you have probably guessed where my preference lies. For my own money, I would much rather have the plodding, boring manager who obsesses about every aspect of a potential or existing holding, rarely straying from a concentrated portfolio of companies they are completely comfortable with. Like Buffett, they do not feel compelled to make changes (and thus rarely get referrals from capital markets) and will literally wait years for a stock to drop to valuation levels they find attractive. Type Twos will also avoid hot sectors and thereby escape the attention of the individual investor until the market craps out, and they don’t feel like putting more money into the market anyway. I pay Type Twos, in other words, to exhibit the discipline that I don’t have.”

” .. it remains important to understand the industry’s bias in this regard and that ‘best manager’ may mean something much different to the average investor than on the trading floor.”

* “Type One: Physically attractive, Ivy League (Harvard or Wharton, almost always), momentum-based investment strategy. .. They will be compelling, energetic, will pause and answer your question in a non-patronizing way. They will linger after the presentation until everyone has left, happily chatting about markets or whatever else the fellow-lingerers want to talk about. .. They are, in short, marketing machines.

Type Two will be older, having spent far more time as a senior analyst due to a dearth of personal charisma. They will likely not be Ivy League. Type Two will execute a more fundamentally-based investment process. Their longer performance track record has a better chance of being stronger, beating the index by a few percentage points per year by holding value during bad years. Type Two’s presentation will be so dull that you’ll want to gouge out your eyes after half an hour.”

Full Story: PORTFOLIO MANAGER SEARCH PRO TIP: FIND THE WORST PUBLIC SPEAKER POSSIBLE (Interloper)

And finally, this short passage from Michael Lewis’ book “The Big Short” seems to perfectly capture the essence of these points:

“In Dr. Mike Burry’s first year in business, he grappled briefly with the social dimension of running money. ‘Generally you don’t raise any money unless you have a good meeting with people,’ he said, ‘and generally I don’t want to be around people. And people who are with me generally figure that out.’ He went to a conference thrown by Bank of America to introduce new fund managers to wealthy investors, and those who attended figured that out. He gave a talk in which he argued that the way they measured risk was completely idiotic. They measured risk by volatility: how much a stock or bond happened to have jumped around in the past few years. Real risk was not volatility; real risk was stupid investment decisions. ‘By and large,’ he later put it, ‘the wealthiest of the wealthy and their representatives have accepted that most managers are average, and the better ones are able to achieve average returns while exhibiting below-average volatility. By this logic a dollar selling for fifty cents one day, sixty cents the next day, and forty cents the next somehow becomes worth less than a dollar selling for fifty cents all three days. I would argue that the ability to buy at forty cents presents opportunity, not risk, and that the dollar is still worth a dollar.’ He was greeted by silence and ate lunch alone. He sat at one of the big round tables just watching the people at the other tables happily jabber away. ”

How I wish I had been there that day to sit with him.

Only Goldman Sachs can get away with Illegal Insider Trading

Alexander P Morris — Thu, 20 Aug 2009 22:33:04 +0000

It’s kind of ironic how Martha Stewart became the poster child for cracking down on insider trading activity, even though it was never even proven or substantiated. For those of you that remember the movie Airplane with Leslie Nielsen, it reminds me of the scene where the police officers detain the little old lady while allowing a dozen terrorists to walk right through the security gate armed with bazookas. Now with Goldman Sachs, we’re faced with likely the greatest inside information and market manipulation scheme of all time — way larger than the usual trading on inside information that seems to go on every day in the markets. And once again, I doubt a single one of the people responsible will end up in jail over it (let alone receive anything much more than a slap on the wrist, if that). More likely, it’ll be brushed under the rug with the rest of the manure and never heard of again. But should we really expect anything different from our government, which at this point exists as little more than a taxpayer-subsidized wholly-owned subsidiary of Goldman Sachs?! Shhhh, thou shalt not use the lordGoldman’s name in vain!

It was also quite telling that Goldman was able to have the FBI detain their programmer Sergey Aleynikov within a day’s notice on charges that the theft of their code was an issue of national security as it could enable others to manipulate the markets. Of course, I’m sure that’s not what Goldman would be using it for (uh huh)… But I suppose that the Plunge Protection Team a.k.a. Goldman Sachs does require “special access” to the markets to do its job and assure it stays in the black (and then sooooome).

(read more...)

Following the Smart Money Traders with the Deepest Pockets

Alexander P Morris — Wed, 30 May 2007 22:00:00 +0000

As a trader, you’ll find that you’re usually your own worst enemy. It’s so easy to slip into bad habits that it’ll make your head spin. In this episode, we teach you what to watch out for, and how to focus in on finding the best low-risk high-reward trading opportunities. Stock mentions: NYSE:EFD

Profiting when Insiders Trade at Extremes in Stock Prices – Part 2

Alexander P Morris — Tue, 29 May 2007 22:00:00 +0000

Traders seeking an edge are always keeping an eye out for interesting insider trading activity in a particular stock. Taking this a step further, there are certain characteristics that can be identified to really “kick” things up a notch. In this second episode, we’ll be discussing a few more setups to watch out for, as well provide a few more examples. Stocks mentioned: NASD:TRGL, NYSE:LUK

Profiting when Insiders Trade at Extremes in Stock Prices – Part 1

Alexander P Morris — Mon, 28 May 2007 22:00:00 +0000

Traders seeking an edge are always keeping an eye out for interesting insider trading activity in a particular stock. Taking this a step further, there are certain characteristics that can be identified to really “kick” things up a notch. In the following two episodes, I am going to discuss some of those catalysts, along with a few examples. Stocks mentioned: NYSE:LLL, NASD:SONE

Injured and need Fast Cash from a Lawsuit? How about a Non-Recourse Cash Advance that WON’T cost you the shirt off your back!

Alexander P Morris — Fri, 27 Apr 2007 22:00:00 +0000

You were hurt in an accident, or someone was negligent and the end result was that you (or a loved one) were injured. You discuss the case with a personal injury attorney who believes in the merits of your case and agrees to take it on. However, you still need money to live on, but you find it’s nearly impossible to obtain a loan. Contrary to popular belief, you can obtain pre-settlement funding without paying upfront fees and killer compound interest (generally exceeding 100% per year)! This episode teaches you how…

How to Win the Million Dollar Challenge :: Trading with the Stars

Alexander P Morris — Mon, 16 Apr 2007 22:00:00 +0000

Welcome back to another Celebrity Filled Hotroastin’ mo Money episode of “Trading with the Stars”! Some of you may recall a few weeks back when Vienna Marriott gave us a few of her picks for CNBC’s “Million Dollar Challenge”. However, we had no idea how well they would actually perform. Today she shares with us some of her secrets, introduces us to Alexander’s new ebook, “How to Win the Million Dollar Challenge”, and shares with us a few new interesting stock picks to check out! Stock mentions: NASD:CHAP, NASD:NBIX, NASD:SBGI, NYSE:CHD, NASD:ONXX

Aleksey Vayner “Impossible is Nothing” Spoof

Alexander P Morris — Fri, 27 Oct 2006 22:00:00 +0000

Like Trump says, “There’s no such thing as overexposure.” Here’s a little
spoof we came up with on Aleksey Vayner’s resume video as featured on MSNBC…

Manchester Inc. – trading the amazing stock that doesn’t go down – and what Amaranth should have known

Alexander P Morris — Thu, 05 Oct 2006 22:00:00 +0000

Manchester Inc. (OTCBB:MNCS)… Manipulated? Controlled? The price action is unbelievable and such perfectly steady moves are nearly unheard of. What can we all learn from not only this freak-of-nature opportunity, but from the Amaranth hedge fund blow-up as well.

Be sure to check out the Notes/Transcript section for updates on MNCS… It doesn’t go down… until it finally does… then watch out! Remember Jesse Livermore’s old adage, when the markup’s over, it’s reeeealllly over.