You and Paul666 are completely wrong.
I assume that you are an IFA advising individuals?
I assume I'm the "you" in that sentence. ;D
I still maintain that anyone who has consistently under-performed the market in the past in both good and bad markets either A) doesn't know what he is doing or is guessing and guessed badly. In which case his future performance might be great, but its strictly a gamble.
So if you want an actively managed fund, past performance of the manager (not the fund itself) can tell you something. Some have consistently over many years out-performed the index in bull markets and under-performed in bear markets. That past performance also tells you something.
Your description of fund managers and research departments is not completely accurate.
Some of these people are top quality, and skilled at spotting good long-term opportunities.
What does "FWIW" mean?
However I also believe that the vast majority of fund managers with good past performance records both A) doesn't know what they are doing" AND "B) were guessing". They just happen to have guessed well over the period.
Nooooooooo! With all due respect this is complete and utter drivel , and is a sign that you have fallen for the "Star manager" hype that the sales departments of investment companies use to pull in the punters.
The rare few who outperformed but did not rely on luck had a very good, high skilled team and a company with rigourous investment processes and procedures behind them, and without them would also have failed utterly.
Yes it is. Everything I say is completely accurate unless I have left a deliberate error to give you something to do.
If someone always performs well in bull markets and poorly in bear markets, it tells you he is likely to be quite aggressive. If vice versa, he is probably quite cautious.
And since they often have significant input into the makeup of that team, some people would think that they get some of the credit for that performance.
Thanks for clearing that up. I wondered why there were so many errors in your posts. ;D
I would indeed use past performance to rule out some of the clowns before making my decision.
Real investors (as opposed to speculators) buy for the long term, so they will have short to medium periods where their performance won't look that great.
It's accrual world.
Or perhaps that he is "cautious" but just got lucky during a bull run? Or that he is "aggressive" but chose the wrong stocks so he didn't perform well during a bull run?
I have to give you something to do. ;D
However even if you believe that it does, it fails to rule out the current clowns because you are always using past statistics and the underlying people are changing all the time.
It doesn't even guarantee that someone you believe to be a "non-clown"(?) will still be there in a week after you have invested your money.
To be honest I am not even sure this is true any more. I believe that real investors buy investments that they can control and have input to, and they are always working to relatively short timescales to get out again. For example buying a share in a small company, buying property to convert and sell on, BTL property, starting a business and so on.
@ Joe - yes, I believe that the stock market has changed. 50 years ago it was about buying companies that would grow over time, but now there are so many speculators and so little real information that it is impossible to do. Fear, greed and herd instincts now run the world's stock markets.
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