Yesterday I described how the most painstakingly chosen mutual funds — Smart Money Magazine’s top eight picks for 1995 — performed a little worse than the low-expense index fund I always recommend if somebody’s having trouble choosing one.
The point? It’s just so tough to beat the market averages consistently! There will always be some who do better and more who do worse (more who do worse, because the averages are just statistics and don’t have to pay fees and commissions). But consistently better? Tough to find.
Continuing with the same theme, and switching now from June’s Smart Money to June’s plain old (but also pretty smart) Money, I was struck by an article that begins on page 27, describing an investment extravaganza 7,389 people attended in Las Vegas April 2.
Were you there?
Money’s reporting sets the scene with Elaine Garzarelli’s standing-room-only address. Garzarelli, you will recall, is the gal who predicted the ‘87 stock market crash almost to the day, and has carried considerable clout on Wall Street ever since.
(She’s bullish, Money reports, thinking that the fair market value for the Dow, based on the cash flow of its 30 member companies, is 6400, and that the bull market has another 25% to go: 7000+.)
Don’t you wish you just had someone like Garzarelli to manage your money for you? She’s one smart cookie, after all, and she is totally immersed in this stuff — lives and breathes it — where you, poor slob, may have a day job in some unrelated field.
The only catch, and this is the part I hadn’t known until I read Money, is that for a while there Garzarelli was running money for people like you and me. “During the time she helped manage Shearson Lehman’s Sector Analysis Fund,” Money reports, “the fund had an annualized return of 4.8% vs. the S&P’s 8.4%.”
So you’d have done considerably better in . . . yep, an index fund.
I called Garzarelli Capital to ask what we should make of this and so far haven’t gotten through. I’m certainly not suggesting I could do any better than she does. I’m just making the point, again today, that the market ain’t easy. You have to compete with folks like Ms. Garzarelli — and even she can’t always do as well as a monkey throwing darts.
(Except that, as I have noted elsewhere, monkeys can’t throw darts. Something about their shoulder joints I think, or maybe they just need practice. But the high-paid chimp I once worked with — we were making a film on investing — was a demon on roller skates but a total wash-out with darts. There were puncture wounds everywhere but the stock pages he’d been told to aim for.)
Quote of the Day
Market economics as currently practiced often ... includes only what's countable, not what counts.~Rocky Mountain Institute
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