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Technology Stocks : LSI Corporation
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To: shane forbes who wrote (19296)7/15/1999 2:37:00 PM
From: sea_biscuit  Read Replies (2) of 25814
 
These fund managers have a lot of performance pressures on them and it is not easy for them to take the long term view and still keep their jobs.

I tend to agree. The S&P500 has become the fund manager's "riskless asset". The surest way for a fund manager to keep his job is to closely mimic the S&P500. So, they will continue to hold the stock.

In the long run, of course, they will underperform the index because of higher expense ratios, transaction costs and taxes. Plus, of course, there is the fact that the index is strictly Darwinian -- if INTC starts to flounder, it will be mercilessly weeded out to make room for some other winner, whereas the fund managers will try to act "smart" and hold it for a while longer before bailing out when things get a little more discouraging...
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