You all are familiar with Yale’s renown endowment fund manager David Swensen. His over two decade performance record approaches legendary status. His integrity and honesty matches that superb investment outcome. His advice is to be trusted. On March, 2011 he delivered an asset allocation talk in Korea.
David Swensen possesses an amiable personality and is an engaging financial speaker. His style is humble, uses numbers sparingly, and full of commonsense wisdom. The lecture examines the impacts of asset allocation, market timing, and specific stock selection on portfolio returns. His commentary and conclusions validate earlier work by a host of financial researchers. When Swensen talks, the investment community listens. So should we.
Access to the lecture is available in a 2-part series, each of which is about 20 minutes in duration. Here are the Links to the presentations:
I enjoyed the lecture; I suspect you will too. Please take advantage of this opportunity to better focus your own personal investment policy.
In many ways, Swensen’s conclusions are similar to the observations reported by Scott Burns in an article that Ted recently referenced. Here is a revisit to Ted’s fine Link:http://assetbuilder.com/blogs/scott_burns/archive/print/2012/07/27/lazy-portfolios-beat-professionally-managed-portfolios.aspx
The Lazy-man’s portfolios do it again. Scott Burns’ commentary reinforces the futility of active fund management from a statistical perspective. His research suggests that owning a passively managed fund offers a higher likelihood of superior performance than a randomly selected actively managed fund. Of course, the linchpin to the selection process is not to randomly choose; research like that executed by many MFO members does tilt those odds somewhat in the favorable direction.
Today, CXO Advisory Group also addressed some issues of the debate with a very short term survey of the success of active mutual fund management with respect to their market timing acumen. Their results again disappoint, and fit nicely into the dismal record accumulated on average by market timers.
Here is the reference to the brief CXO study:http://www.cxoadvisory.com/7922/sentiment-indicators/investment-managers-and-market-timing/
CXO concludes as follows: “In summary, evidence from simple tests on NAAIM survey data does not support a belief that the money managers as a group successfully time the U.S. stock market over the short term.”.
This rather tepid summary is consistent with the limited time scope of the simple study. But it adds yet another nail to the market timers coffin.
I recognize that I provided a whirlwind reference tour, but please visit and enjoy these Links. I anticipate that your portfolios will benefit from the tour.
Your comments are welcomed.