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Strategies & Market Trends : Ask Vendit Off-Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: rrufff who wrote (3371)	1/2/2005 7:22:04 PM
From: Walkingshadow	Read Replies (1) \| Respond to of 8752

Hi rrufff, Thanks for that post. Sounds like you have a lot to offer here, I encourage you to post on these issues. I couldn't agree with you more, except to say I don't think you go far enough. I imagine the reason was probably that one could write a book on this subject..... One of my pet peeves is mutual funds (even though I have long-term positions in a bunch of them). I think it borders on criminal that the vast majority of mutual funds out there fail to perform as well as their benchmarks, yet reap huge rewards from shareholders for their often abysmal performance. If you hired a carpenter to do some work for you, and he displayed anything like that level of competence, you'd have yourself an open-shut case in court. But that standard is waived when it comes to MFs. I think it would be fitting (but will never happen) if MFs ONLY received compensation if their performance exceeded their benchmark, and the degree of compensation were linked to how much they beat the benchmark by. If they can't beat the benchmark, they either make zero, or are charged an appropriate penalty (probably at least 75% of MFs would close up shop should THAT ever happen....) Realistically, I think there are significant limitations on how much reform the system will actually tolerate. In my view, the only reason markets remain open is because they facilitate the orderly transfer of wealth from the retail investor to the big boys. Just as Las Vegas would close its doors if the odds of gamblers winning ever improved to the point where they were consistently beating the house, so too the markets would close their doors if the advantage enjoyed by professional traders, MMs, specialists, and some institutions were completely erased. They simply would have no reason to support making a market, so they would cease to do so. The best and simplest antidote, it seems to me, is to spread information as much as possible, the more the better, so that's why I appreciate posts like yours. T