I mean, how do they keep a straight face? I just got a mutual fund report-this idiot is PROUD that the fund (under his management) ONLY lost 34% this year!
“Rick, how did the fund perform”
-“We were down around 34%, all in all not too bad, considering the overall market…”
-Well, this is my money you lost, you spoiled brat! Whileyou were scarfing down your tax deductable, three-martini lunches at the Four Seasons, my retirement money is going down the drain!
Damn, they allought to be fired!:wally
These used to be my clients, and a lot of them are complete fuckwits. That said, if the market is down 50% and they only lost 34%, then it may be a really good performance. I know you’re out real money and there is no love lost between fund managers and myself, but you might be out of line here.
On the other hand, I’m sure there are plenty of legitimate grievances you could air about fund managers, including possibly this gripe.
Anyhoo, is there a general question here?
Moderator’s Note: Dropping from GQ into the Pit.
Most mutual fund managers are hamstringed: they cannot hedge properly against losses, and must stay within the parameters of their index (as decided by the fund Board of Directors). They’re happy when they beat the index because they can’t stray too far from it.
For example, if you are a large cap value index manager, you must buy large cap value stocks. You must remain nearly fully invested. You cannot short stocks. You are very limited if you can buy options at all.
Basically, your fund manager must buy stocks that are going down, and his only hope is the stocks she buys don’t go down as much as the index as a whole.
Doesn’t make me feel any better looking at my 401(k) statements either.
My retirement plan is to hang myself at age 65. That’s all I’ll be able to afford – and only if the rope is on sale.
Thanks for stock tip. Given the direction of the market, rope may be the next big thing.
Why are there not funds which can short? Or at least put the money in a savings account if the market is plummeting?
Someone once said it was so hard finding a well managed fund you might as well find a straight index tracker.
ralph As **D_Odds correctly explained, a fund manager has a limited amount of options. Depending on your circumstances(your age, whether this is a 401K, etc.) then you have some latitude in what you can do. The manager of a specific fund doesn’t.
If you are still young(40 or under), then being down 34% this year might not be the end of the world. After all, you didn’t complain when that fund was going up 20-30% per year, did you?
If you don’t have the risk-tolerance to weather a bad bear market, then you have/had two choices: either you should have had the economic savy in late 1999 or early 2000 to see that the general stock market was a bubble and taken out some/much/all of your money and parked it in a bond fund or a money market fund. Most people have that ability in a 401K, etc.
Or, you should have had you money in a less agressive fund. If your fund is down 34% this year, it aint a conservative fund.
Shade You’re right. You should probably find an index fund if you don’t have much tolerance for risk. Actually, you might do as well with an index fund overall.
Of course, it’s too late for most people who simply have a fund that was blazing in 1995-2000 and has tanked. Remember, you didn’t complain when you were making stupid percentages in the bull market. So don’t complain when the bear is biting you.
Most people don’t have a clue about the equities markets. I say, take charge of your economic life today. Start learning. THere will be opportunities in the future. Educate yourself.
As others have pointed out, the Fund manager works acording to certain rules regardless of market conditions. It’s the investor’s choice of fund (rules) that’s at fault. However, as China Guy says, some of these guys are fuckwits - they rely on luck to make themselves look like geniuses. Fine when markets rise, but…
*MANAGER OUSTED: Fidelity Investments is removing the manager of its battered Fidelity Aggressive Growth Fund.
Robert Bertelson, who took over the technology-stock-filled portfolio in February 2000 – just as the market’s bubble was bursting – will be replaced effective Friday, Fidelity said. Over the last three years the $3.9 billion Aggressive Growth Fund has lost an average of 34% annually and is down 41% so far this year, making it one of the worst performers in its class.*
Yes, that’s “…34% annually…” Ouch.
Oh, and what about the 2% in fees they took from you as well? They make money no matter what. Any other costs that you got dinged with as well?
This is why I’m in the Hedge Fund industry. We only make money if there are profits to be had. And this past year has sucked, so I wouldn’t have made much either- our fund is up only 1% y.o.y. But when the Bull returns, everyone will be smiling.
Unfortunately, you have to be rich to invest in Hedge Funds (Qualified Investor status). I can’t even invest in the fund I manage unless I start an offshore corporation and do a little dance around some US Tax laws…So today I’m in I-Shares indices (S&P, Global, Europe, Russell 3000) and a few mixed stocks (IBM, Disney, Frontier, QQQ) and I’m doing most of the buying now…I think it was JP Morgan who said that the best time to buy was when there was “blood running in the streets.”
I know, I know, buying low and selling high means actually buying when markets are low (now?) and selling when they are high (January 2000 when everyone was screaming ‘Nasdaq at 6k by June!’). But boy, that is a scary thing for some people to actually do. Seems like they would rather wait for an invitation. “Wow! Markets have jumped 20%! Maybe now’s the time to get back in!” :rolleyes:
-Tcat
The other folks have it right – as a mutual fund manager, my job isn’t to make you money. It is to invest in my asset class as best I can. Your job (or that of your broker or financial planner) is to determine how to allocate your resources. Some mutual fund prospectuses allow a manager to take a large cash position if s/he is bearish, but most don’t for the simple reason that you are paying us to buy whatever – muni bonds, large cap stocks, foreign stocks, etc. If you want to be in cash, be in a money market fund and save some management fee.
So yes, we’re happy if we beat our peers. We can’t control the market, but we can (or believe we can) control our performance relative to our asset class.
FYI, most hedge funds available to U.S. investor (and indeed, most investors around the world) take a fee from 1/2 percent to 2 percent plus a piece of the profits.
But the direct answer to your question is no. We have no shame. 
Dropping? Did you mean elevating?
I remember that when peter Lynch resigned as head of the Fidelity “Magellan” fund, he was widely respected. His replacement (jeffery Vinik) was a crook-he was shorting stocks on his own account, that he was BUYING for the fund! This creep managed to lose a huge amount of his client’s money-and Fidelity paid him a huge bonus!
I want this kind of a job!-rewards if you screw up!
If there were rewards for screwing up, you’d just have earned a billion dollars, you stupid, worthless fuck.
You have completely misrepresented the circumstances of Vinik leaving Fidelity.
What you may be half-remembering (appropriate for a half-wit) is that he took some heat for talking up stocks in the press which he was selling in the fund. He did not short stocks in his personal account which he was buying, you worthless piece of shit.
Wanna know the irony? Here’s why he <i>really</i> got fired/let go. He got concerned about stock market valuations and made a poorly-timed decision to buy bonds. In other words, he did what you are saying that your manager should have done.
Hindsight is 20-20, ain’t it, asshole?
My dear manhattan, such venom and bile ill-becomes you!
One would think that you had been wronged.
Go to the bathroom and wash your mouth out with soap!
You know you’ve hit a nerve when a moderator messes up the coding.
manhattan’s right about the hedge fund management fees…they’re a little lower (usually) than a mutual fund. Plus one typically gets charged 20-25% of the profits. Hedge funds are also highly unregulated. A good, scrupulous HF manager is worth his weight in gold. Finding a good, scrupulous HF manager can be difficult; I talk to many new managers; the hardest part about becoming an HF manager is raising capital to launch a fund. Managers that do poorly tend to close up shop, wait six months and reopen with a clean slate. Mutual funds are highly regulated, are usually (always?) controlled by an external board of directors and have strict reporting requirements. They also generally offer good managers less incentive to stay as opposed to the managers opening their own hedge fund (or going into an existing HF shop). That’s why Lynch and Vinik made so much money; that’s Fidelity’s flagship fund and manager turnover is looked upon poorly in fund evaluations.
So Manhattan-you don’t see your job (as mutual fund “manager”-is that the right word?) as making money for the fund investors? What idiotic excuse for a mutual fund do you “work” for?
Do people really invest their money with such a fund “manager” as you? Why would they?
…“yes, I am interested in my money going into a “balanced” portfolio…I don’t care if I lose my entire investment,I WANT a balanced portfolio”
Who hired you?
This is obviously a case of the putz calling the kettle black.
I don’t know what type of fund Manhattan manages, but I can hazard a guess - perhaps the type where the fund manager actually limits himself to buying the types of stocks the fund is SUPPOSED to be investing in (looking for the best companies in those categories to purchase stock in)? What a shocker of a concept - that a small cap growth fund’s manager would limit himself to actually buying only stock from companies that meet the definition of a small cap growth company, or that a fund manager for a emerging markets fund would limit himself to stocks from companies in developing countries! Investors need to pay attention to what the funds they’re buying are investing in, and decide if those funds meet their investment needs - something you obviously didn’t do.
Idiot - there are no guarentees that you will make money short term when you invest in the stock market, even if you’re doing so using mutual funds. Long term, the stock market DOES consistently out-perform other investment vehicles - but that performance comes at the cost of large year-to-year fluctuations. If you anticipate needing to depend on your investment money in less than 10 years, that money SHOULDN’T be in the stock market, but in another, equity-preserving vehicle (such as a money market, or long-term bonds). You won’t get the benefit of high growth rate during a bull market - but you also won’t lose your principle when the bear market hits (and it ALWAYS returns eventually). And this bear provided LOTS of warning - people were discussing when the stock market bubble would finally burst at least two years before the collapse actually occured. So what’s your excuse for not shifting YOUR retirement funds to a capital-preserving vehicle before the long-anticipated collapse finally happened?
This sort of rant is the very reason I don’t ever want to see Social Security privatized - too many people are completely ignorant of investment strategies, too damned lazy to learn, and would consequently lose ALL of their retirement moneys (rather than just a good portion of them) if left to handle their Social Security accounts as well as their 401Ks.
Ralphie boy, did you by any chance read the complete prospectus of the fund(s) you bought? I would bet a large amount of dollars that you did not. :wally Caveat Emptor or buyer beware. Know what you are buying, and if you bought a highly leveraged growth hi tech dotcom fund and are now bitching about losing 34%, then you don’t have a leg to stand on.
The thing I love about the market is that all crap aside, you are the one that made the investment decision. And you solely are the one responsible for the loss. No if’s and’s or but’s. You are the one that made a bad decision and you’re the one that lost money. You could have sold off your funds and hid the money under the mattress :wally