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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (48574)	2/24/1999 10:22:00 AM
From: Knighty Tin	Read Replies (3) \| Respond to of 132070

Earlie, The best evidence of margin over usage is the Dell thread. A lot of folks lost a ton of money in even such a minor down move as we had last week. Mutual fund cos. adopt closet indexing and "team approaches" for another reason also. The superstar fund manager system threatens the firm's bureaucracy. I worked for a firm that had a superstar system, American Capital, in the 1980s. That system made them the only mutual fund co. to ever have 4 funds on Forbes Honor Roll 3 years in a row. But the superstar managers "hit the bid" when the job offers rolled in and other future stars were hired. Then, after a couple of more years of superb performance, some were fired for smarting off to mgt. (no, surprisingly enough, I dodged that bullet <g>), some hit the bid and some just quit. The firm finally decided to hire a closet indexer to run the firm and a team approach was adopted. Manager turnover, after a first year bloodbath, cooled down a lot. Of course, the "team" now ranks 50 out of 89 mutual fund companies, whereas in the 80s the superstars ranked number one out of a lesser number of competitors. But they don't have those pesky Forbes reporters bothering them by writing up their funds any more. <g> And they also don't have those annoying sales coming in in volume to disturb the clearing agent. BTW, another of my former employers, Waddell & Reed, stuck with the superstar system and ranks #2 out of 89 fund families. MB

To: Earlie who wrote (48574)	2/24/1999 12:19:00 PM
From: BGR	Read Replies (1) \| Respond to of 132070

Earlie, Just a personal preference, but I disagree with the notion of value investing as I find the metrics of value investing to be very inconsistent. I prefer growth investing myself. And I have not yet seen any small/mid caps which are growing at a rate higher than their equity appreciation rate. I would like to know if you have seen any, for I will perhaps start researching them then for possible future investments. As for large caps, many of then are growing at rates significantly lower than their equity appreciation rates. This I suspect is an index fund related behavior, which I do find scary. However, large caps (not the internet ones) also tend to have significantly higher growth rates than small/mid caps. I hate margin. I truly do. This partly comes from growing up in a culture which believes in saving and not consumption - which has not been very good for that country actually - and partly from beig burnt badly once from underestimating the risks associated with margins. I have tried to warn the folks of my regulsr thread about the risks of margin. What I reacted to in your post was a (perceived, maybe) distinction between the so-called smart money vs. dumb money. I have personally found that most (with a few exceptions) market professionals are street smart at best and do not understand modern finance as well as technology which is the growth engine of this economy. I would not be worried about what market professionals are doing. -BGR.