House of Paine

managed or indexed ???

 "thank god  now there's
    a choice ...."
           howard johnson 

---------------------------


------ this is a guest post by
my old pal
  sid silver: 
      financial wizzrd at large 

 a few of you may remember 
   
his now  long gone
  boston globe 
    column
"high low silver" 

--------------------------

   sure sure sure

 ya hear this guff 
      at high noon every friday

 top managed fund
 beats 
the market by .....

u might well ask 

so whats the big deal here

 beatin slow freight 
like 
them mechanicals

    the dumbo trailers
     the indexes ......

quick and dirty answer

               nothin...



===================================


     "some "
 pretty much  have to....

  thats  arithmetic 

  roll yer dice sport 

 that is if you can't 

  do it geko 

    and 
  get a few inside views   .....



===================================
and sure 
the actively managed horde 
can deliver a double insult

get u licked by a dummy 
  and 
  charge u for it  too


---------------------------
 so okay 

  its a  nasty  blanket toss 

 house odds are 

over time 

over the  whole 
         lot of uz

they're  billin us
      for 
                  nothin  
  darts and diversity 
    won't get uz 

-------------------------------

unless 
   u're a mini buffet 

u /we pawns 

  are the make weight    

  unless 
 u  
can  pick  next period's 
          beaters from the beaten  
       more quarters
            then not
or 
   beat the average
      picks
    during 
    the most active tquarters
or
   some combo of both ....

but what ever the goal 


each quarter
    some of your funds
          will finish with  the winners 


  problem


 are any of em
that are big enough to notice
 any better  then the index
over 20 years  ?????
 
and will ya hold on to
em thru it all anyway

when the latest 
man operated
 phenom gets hyped 


 brainy effort 
 always seems 
   swifter 
than it is  
if you only notice it 
when its passing 
the mechanical folks 

not when n quarters later
  its dropping behind  


  
-------------------------------
only one point
here 
worth making
that's 
too obvious to mention
more then once

 as to the whole 
of uz  fundeees 

summed and totaled 

well.....

think of the old line

  "  if we're
   more then half
    of
    all there is
       can we all be 
     above the median   ????" 

 

 so  ya  about half
of   managed funds 
oughta beat indexes

  if they're A framed
 
A framed as in 
     built entirely 
out of  indexed stocks 
so its only a matter of 
          different proportions 
   then  the stocks 
  as a whole are held 

  
but then there's 

 B framed funds 

  (and heres the bobo)
 b framers  buy
at least some  stocks
   not  in the indexes  

 
  now if there were only funds 
  part A investment funds
    performance
obviously oughta average to the average
   if there are no other investors 
   besides man managed 
          except   
        index funds 
in this simplefied market world 

      the index funds
         can't  
     beat the average discretionary 
           A  framed fund
cause they are 
           ....its mirror image  

    now if we assume
   all other investor/traders 
            wash each other out 
   we have a trivial

extension

  so what do these other investors 
manage to to 

these private funds 

 well 

when
as happened alot in the high 90's
the average  public discretionary funds
  get beat by  the indexes 

you is seein
the trail of the privateers 

as they zip thru 
the land of the indexed stocks 

  taking
dope  money 
off the table as they go .....

---------------------------------


      but acutally its 
the partly B framed  public funds 
that 
are the real relm
of the proper
        rube alert


    its trick or treat here 

  
emerging stocks 
too small cap 
   ipo's 
 foreign 

      blah blah blah 

      rule of rules here

"the tower boyz
just want your bets 
        in their game 

in the long run

not only are you "dead"

 
the  mother fuckers 
      have  most 
       of your heirs  money