Michael,
Since you do not know the details, what prompts you to conclude that JR's reputation is well deserved?
And, BTW, the matter is not one of risk management, it is one of risk, pure and simple. More risk yields more return. NYT reports that JR used leverage upto several times his own capital. I repeat, given that kind of leverage, JR's returns are underwhelming.
Now, your position may be that JR managed the risk from that leverage superbly (till he went bust rather spectacularly), hence his reputation. But, what proof do you have of that? And, why exactly should any investor take a lot of leverage and hence risk (even if superbly managed, if one is inclined to give JR the benefit of the doubt) to earn a mediocre return (adjusted for leverage), when the same level of leverage with zero management would have yielded a higher return? In my book, that's is not smart.
-BGR. |
