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Old 02-06-2009, 09:24 PM   #201
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Also here are the capital losses they realized... a little under $40K worth.

http://i42.tinypic.com/29dip8z.jpg

If I had put the $800K in an index fund like SPY in late October when I first bought, I'd be down 10%. As it is with these guys I'm even plus have that $40K short term loss carryover. They've earned their $2K quarterly fee so far, we'll see how the rest of the year goes.
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Old 02-07-2009, 12:17 AM   #202
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Originally Posted by Kabekew View Post
Also here are the capital losses they realized... a little under $40K worth.

http://i42.tinypic.com/29dip8z.jpg

If I had put the $800K in an index fund like SPY in late October when I first bought, I'd be down 10%. As it is with these guys I'm even plus have that $40K short term loss carryover. They've earned their $2K quarterly fee so far, we'll see how the rest of the year goes.
You keep doing apples-to-oranges.

Your funds don't mirror SPY, so it makes no sense to compare the returns. You have a fair chunk of bond funds in there.

Your other comparison was to some undefined portfolio of your picks.

Let me guess, if SPY takes off in the next three months, and your funds lags, then you'll want to compare your funds to some old stagnant bond index?

The only way you will know if these guys earned their keep is this:

Give them an AA you are comfortable with.

Let them choose the funds, and you mimic that AA with index funds/ETFS. It would not be hard. Compare returns and volatility. That would be a comparison.

-ERD50
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Old 02-07-2009, 10:29 AM   #203
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There's a letter to the editor in the new Kiplinger's magazine where a guy did exactly what ERD50 is saying. He shows how easy it would be to do. In his case, his low cost index fund portfolio blew the managed one away.

It would also be easy to do the shadow portfolio with fake money if you don't have enough to do it for real. If you are truly interested in the value your managers are giving (or taking) I would recommend giving it a try. Some simple additional bookkeeping for a couple years should be a small price to pay for peace of mind. Or bragging rights.
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Old 02-07-2009, 11:04 AM   #204
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Kapekew, I asked my rep at Fido about the large number of fundss in your portfolio, he said you may have transferred some of your existing positions into this account?

Your post stated (implied) new cash?

My rep was trying to get me into the same service.

mP
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Old 02-07-2009, 01:12 PM   #205
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I'd say this is a useless discussion at this point. The OP is emotionally invested. These guys have earned their fees, folks.
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Old 02-07-2009, 07:42 PM   #206
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The only way you will know if these guys earned their keep is this:

Give them an AA you are comfortable with.

Let them choose the funds, and you mimic that AA with index funds/ETFS. It would not be hard. Compare returns and volatility. That would be a comparison.

-ERD50
Even this wouldn't prove much, especially to the converted. All you'd know when it was over was that, in retrospect, over that particular time period and market conditions, one method topped the other. You'd have to do a great number of these to prove to yourself that the result was statistically significant. In the meantime--Manager A changes (or the software is improved at Fido, etc) and the new and much brighter Manager B (or software, etc) makes the previous data obsolete.

There's no way an individual can prove this to himself using his available resources. Fortunately, the academic studies have just about closed the book on the indexing vs active management debate, and anyone who wants to avail themselves of the info can look at it. Unfortunately it doesn't come packaged in a glossy handout and it doesn't promise instant world-beating results, so it will always be at a disadvantage. I plan to leave Kabekew alone--he's happy, he believes he's getting a great deal, and his payments to Fidelity are helping to keep the costs of my Spartan funds low. It's a win-win.
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Old 02-07-2009, 08:34 PM   #207
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Even this wouldn't prove much,.... All you'd know when it was over was that, in retrospect, over that particular time period and market conditions, one method topped the other.
You are right.

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I plan to leave Kabekew alone--he's happy, he believes he's getting a great deal, and his payments to Fidelity are helping to keep the costs of my Spartan funds low. It's a win-win.
Right again. Case closed (AFAIAC).

-ERD50
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