Chuck Jaffe Exposes Fund Manager Sweet Talks
When it comes to investing columns, thank goodness for the cynics! I’m not just saying that because I’m also a cynic, but along with positive news often comes a lot of hype and fluff. Cynics have the unenviable task of having to prove their negative assertions by rigorous research and logical explanations more so than their salesmen-like counterparts!
I’ve been looking for an opportunity to introduce Chuck Jaffe’s writing to my readers, and his recent article about fund manager cover-up phrases really enlightened me to the politically correct double-talk that fund managers engaged in. I’ll preface by saying I don’t expect fund managers to bury their heads in financial statements every minute of their work hour. But when they start to sound more like salesmen rather than an investor. You better believe I will reconsider where I put my money.
Let’s list some of the famous fund managers / investors in history’s past. Warren Buffett, Sir John Templeton, Peter Lynch, David Dreman, Bill Miller (mentioned in Chuck’s article) and many others. One common trait they possess is that they stand by their convictions. They stand by their investment decisions whether those turn out right or wrong, they give you the facts with no spin.
Most fund managers may be fearful of investors fleeing their fund should they paint a bad picture, but that’s merely an excuse. This concern is really a question of the chicken or the egg. Investors wouldn’t be looking for the exit if you didn’t patronize and understimate their intelligence, or have a consistent positive track record for that matter! Looking at the above name list, none of those fund managers needed to be apologetic early in their career nor have they changed their style or demeanor towards investors throughout the years!
As Chuck Jaffe so succintly puts it,
Most fund managers get it wrong when they get things wrong. After making money-management mistakes they make excuses, act indifferent to performance or make knee-jerk changes that overreact to the scope of the problem.
Here are 5 phrases that Chuck identifed and analyzed in detail in his column:
- “It’s a challenging market right now”
- “We underestimated the risk …”
- “We’re cautiously optimistic …”
- “The long view of our performance shows …”
- “We’re taking steps to improve returns”
Have you heard any of these from your fund managers or your fund’s annual reports? Personally, I have heard these same phrases on a few fund manager roadshows. I didn’t think twice about it during my impressionable days, but these are the same phrases repeated by the fund company’s sale force too. When did fund managers turn into politicians, complete with their own team of press secretaries?
If you like Chuck’s analysis, I highly recommend grabbing Chuck Jaffe’s RSS feed for his MarketWatch articles. Alternatively, you can subscribe to his columns via email (is email old school already?) if you are not familiar with syndication technologies. Chuck has been helping people stay clear of suspect opportunities with his regular feature “Stupid Investment Of The Week” for many years. You’d be wise to have him working on your side!
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- Investorial Is One Year Old + What I Learnt About Investing By Watching The Good, The Bad and The Ugly!
- Good Stocks = Good Businesses?
- Irwin Michael’s April Commentary
- Deep Value Face-Off: Irwin Michael vs. Ross Healy (Part 3 of 3)
