CABOT Sinkhole (PRST, ZOLT, IOMG...) How deep? Message Board

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Non-Tech : CABOT Sinkhole (PRST, ZOLT, IOMG...) How deep?

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To: Cameron Dorey who wrote (50)	6/28/1996 4:48:00 PM
From: Scott Maxwell	of 90

You make some pretty good points, Cameron. (Please excuse Andy, he's been under a lot of stress! <g>) The CML, until this recent speculative runup (last few years), did slightly worse than the market, at least according to Hurlbert (sp?), who does those dispassionate ratings of performance. I agree the CML may have been useful when it was less followed, exposing interesting little-followed companies before the masses found them. As you say, the more it's read by mindless masses, the less useful (and more dangerous) its recommendations became. This is much like any investment advisor's record: when they manage small amounts they beat the market, but when given much more their performance degrades as the situations they find are overwhelmed by the mass of money and the people who parasitically follow his/her moves. Studies have shown that hedge fund size correlates inversely with performance. Actually the situation's even worse with Cabot, since the number of people following his recommendations (many without subscribing!) exploded, creating tremendous demand for his stocks, creating better apparent performance, etc. The unwinding of that bubble is happening now.

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