vendredi 12 février 2021


What I like about my blogger situation is that, while I don't get any pay, any recognition, any groupies, any privilege and so on... I however can say what I want about any stock and any fund manager. And I can be honest about what I do with my portfolio. I can say that I've done shitty things and say that, if I had any courage, I'd hara-kiri when I'm beaten by the market by 20%. 


In this period of post-mortems about performance in 2020, we can read a bunch of letters from money managers. 

This year again, I'm pretty upset to read that some managers that I respect are comparing their performance with some imaginary index. Tell me who can really be sure that any fucking made-up benchmark is reliable? 

I don't give a fuck if you're 100% techno or 100% banks. Compare yourself to the market. Even if the market is not made of only banks or only tech companies. The market reflects the average performance that anybody should expect when investing on the market. That's all. 

OK, now, let's take a look at some canadian funds. Let's remind that the S&P500 performance for 2020 has been 16%. 

Giverny Capital (Quebec): 12,9% and they compare themselves to an abstract index that did 15%

Medici (Quebec): 11,9% and they compare themselves to an abstract index that did 10,8%

Barrage Capital (Quebec): 25,9% and they compare themselves to the S&P500

Donville Kent (Ontario): 22,4% they vaguely compare themselves to the S&P500

While I respect the first two funds and while I'd never give my money to the last two funds, I have to admit that these last two seem more honest to me. But maybe they're more honest because they beat the S&P500? Who fucking knows?

Let's think about the average investor who doesn't know anything about the market. All he wants is to make money without any effort. That guy just takes a look at the information given by the fund and, he's got it in the ass. Because he believes that his fund did better than the made-up index that did 3% (while the S&P500 did 15%). 

I know that a fund manager may say that some stock he holds isn't represented on the S&P500, so he should take another part of another index and blah blah blah. But I don't care. Once you've started manipulating multiple indexes, you make it more and more opaque. 

8 commentaires:

  1. You’re not wrong however what do you want compare a fund or model to if it has to hold a certain amount of fixed income? For example, our Conservative Growth Model can never hold less than 50% fixed income. What do you benchmark a 50% global basket of securities and 50% fixed income requirement?

    Now if it’s all equity you have a point. If you only own and will only ever own US Stocks then compare yourself to the S&P500. If you own assets outside the US then I would suggest the appropriate benchmark is the MSCI World Index. My 2 cents. We miss you in BC!

    1. You’re right. I know that clients have different needs, but if I was to give my money to a firm, my only objective would be for the fund to beat the S&P. Because anybody could get the performance of the S&P via an index.

      But of course, if you have a super conservative client who wants only government bonds, it would be ridiculous to compare your fund with the S&P.

  2. Let say that you have sold your company from an offer you can’t resist, or you unexpectedly inherit a huge amount of money? Would you expand your portfolio x times on your own or would you prefer to invest that money in two or three funds that fits your investing philosophy for 1 to 1,5% of fees, for the time you will comfortable to manage your portfolio with the new capital situation? For this type of situation, these firms have a purpose.

    On the other hand, you can invest that money in an index fund for much less fees. The return of the private fund should not be that far from the S&P500.

    It is one thing to manage your own money, but it is a huge responsability to protect the capital of others. I would not manage the money of others the same way I would do for my own money. I would be more defensive in my stock picks if I was a professional.

    To beat the S&P, you can do like Barrage and ask an hefty fees: Microsoft, Amazon, google, Netflix, Facebook and Shopify. They beat the s&p, but would you invest the majority of your liquid asset in this fund?

    1. I would not give my money to Barrage. Never really liked these guys. Even before they started their fund, I didn’t like their approach and what they wrote on Les Affaires.

    2. Me too. They take very huge fees: 1% of the entire portfolio plus 20% of the capital gain you are making

  3. FYI: Le portefeuille de la Lettre financière COTE 100 s’est apprécié de 13,1 % en 2020, une performance que nous jugeons très satisfaisante. Plus important, son rendement annuel composé depuis 1988 se chiffre à 11,94 %.