Author Archives: David Snowball

About David Snowball

David Snowball, PhD (Massachusetts). Cofounder, lead writer. David is a Professor of Communication Studies at Augustana College, Rock Island, Illinois, a nationally-recognized college of the liberal arts and sciences, founded in 1860. For a quarter century, David competed in academic debate and coached college debate teams to over 1500 individual victories and 50 tournament championships. When he retired from that research-intensive endeavor, his interest turned to researching fund investing and fund communication strategies. He served as the closing moderator of Brill’s Mutual Funds Interactive (a Forbes “Best of the Web” site), was the Senior Fund Analyst at FundAlarm and author of over 120 fund profiles. David lives in Davenport, Iowa, and spends an amazing amount of time ferrying his son, Will, to baseball tryouts, baseball lessons, baseball practices, baseball games … and social gatherings with young ladies who seem unnervingly interested in him.

When the facts change, I change my mind. What do you do, sir?

By David Snowball

Investors are forever willing to panic themselves at the prospect that their managers have taken Stupid Pillstm. The presumed signs of ingestion: any period of relative underperformance, pretty much without regard to absolute performance, the brevity of the period, its cause or the appropriateness of the peer group.

The automatic urge: running away, either to cash or to an investment with eye-catching recent returns.

Which is, by Continue reading →

Briefly Noted

By David Snowball

The imminence of Halloween reveals itself in the deadened thud as the walking dead move toward the graveyard. Summer saw a curious lull in fund liquidations and manager changes both, but the end of summer is ending that reprieve. We’ve tracked 33 obituaries for this issue. A few were high-performing funds that couldn’t attract attention. There seems to be a pattern in the remainder: lots of funds designed to hedge against market volatility, lots of funds designed to hedge against rising prices and a few more funds with exposure to emerging markets. A fusty old curmudgeon might note that liquidations in a category peak at the moment of maximum Continue reading →

August 5, 2018

By David Snowball

Dear friends,

Thanks for your patience. The end of July and beginning of August brought a bunch of challenges.

This month’s issue has a lot of interesting content; just not quite so much as we’d planned. With luck, we’ll shift the vast bulk of it to September.

Zoom in to Charles and the MFO Premium walk-through

MFO Premium offers a ridiculous wealth of information for a Continue reading →

Launch Alert: Fidelity ZERO Total Market Index Fund (FZROX) and Fidelity ZERO International Index Fund (FZLIX) 

By David Snowball

We’ve got Coke Zero. We’ve got Pepsi Zero. I guess it’s reasonable to wonder, why not Fidelity Zero?

Wait, we don’t have Coke Zero or Pepsi Zero. They both failed in the marketplace and had to be reformulated, renamed and relaunched.

But we do have Fido Zero.

On August 3, 2018, Fidelity launched two zero/zero index funds sporting zero Continue reading →

Advice not to follow: Inverse ETFs as a hedge

By David Snowball

It’s sensible to think, in advance, about the best responses to a market that is expensive, increasingly volatile and beset by external shocks, from tariffs to rising interest rates and policy instability.

An unauthored piece in ETF Trends recently weighed in with this advice: look at buying inverse or levered inverse ETFs.

With the heightened Continue reading →

Advice not to follow, #2: Avoid ESG funds, they’re losers

By David Snowball

The most consistently strong analyses of US and world markets come from a shrinking handful of sources, The Financial Times and The Wall Street Journal prominent among them. MFO maintains a paid subscription to each.

Nonetheless, even they produce the occasional bewildering piece. In “If you want to do good, expect to do badly” (6/29/2018), the Journal’s James Mackintosh revives an old canard. “Investors are increasingly convinced that they can buy companies that behave better than the rest and make just as Continue reading →

Elevator Talk: Jim Callinan, Osterweis Emerging Opportunity (OSTGX)

By David Snowball

Since the number of funds we can cover in-depth is smaller than the number of funds worthy of in-depth coverage, we’ve decided to offer one or two managers each month the opportunity to make a 200 word pitch to you. That’s about the number of words a slightly-manic elevator companion could share in a minute and a half. In each case, I’ve promised to offer a quick capsule of the fund and a link back to the fund’s site. Other than that, they’ve got 200 words and precisely as much of your time and attention as you’re willing to share. These aren’t endorsements; they’re opportunities to learn more. 

People love fireworks, those happy confections of explosive Continue reading →

Funds in Registration

By David Snowball

A surprising number of interesting funds have quietly entered the SEC’s new-fund pipeline. While we don’t cover passive ETFs or funds not available to the general public, even there there were interesting developments. DFA Emerging Markets Targeted Value Portfolio will target small and mid-cap EM value stocks, which is consistent with DFA’s research bent and validates the increasing interest in EM value. Impact Shares YWCA Women’s Empowerment ETF will target firms whose values align with the YWCA’s long-time public goals. Of more direct interest, Rajiv Jain of GQG Partners is launching a fund focusing on US equities, a long-time AllianzGI manager is adding an EM value fund to the mix, The Great Gabelli is seizing the helm of his 15th fund and a team from France is offering a direct challenge to the ideology of market-cap-weighted indexes. Continue reading →

July 1, 2018

By David Snowball

Dear friends,

Welcome to July! You shouldn’t be here.

Welcome to the Observer’s annual “summer light” issue in which you point out the obvious: you need some time away from the headlines, the daily howling, the apocalypse, the partisan glee, the certainty of boom, doom or gloom (to borrow from the name of Marc Faber’s thoughtful reports).

Setting aside the overtly political headlines, here’s a Continue reading →

LS Opportunity Fund (LSOFX)

By David Snowball

Objective and strategy

LS Opportunity Fund pursues three goals: preserving capital, delivering above-market returns and managing volatility. “The secret,” says manager John Gillespie, “is to avoid large losses.” They invest, both long and short, in individual stocks; they do not short “the market,” they don’t use esoteric options and they don’t typically use ETFs. They normally will have 20-40 short positions and 50-70 long ones. The long portfolio is both all-cap and value-oriented, both of which are fairly rare. The short portfolio targets Continue reading →

Funds in Registration

By David Snowball

VanEck has registered a launch a video-gaming and e-sports ETF, which strikes me as silly in the extreme but at least doesn’t include cryptocurrencies. “Silly in the extreme” means we’re not saying anything more about it. Happily, a bunch of really solid offerings – a new Litman Gregory, a bond fund run by ex-PIMCO guys, an emerging markets offering from LSV and the ETF version of several four-star funds – were filed at the same time. All of these funds and active ETFs are likely available by the end of September. Continue reading →

Briefly Noted

By David Snowball

All the developments that are worth knowing but aren’t worth separate stories, including 50 funds that just earned headstones rather than headlines. An absolute disaster? 10% of vanishing funds promising “absolute returns.” Wells Fargo promises that you can trust them, just before announcing millions of additional fines. Tadas moves up, a favorite fund closes quick and hard, Monrad celebrates his 58th and the Mathers Fund leaves this veil of tears after 53 eventful years. Continue reading →

… a snippet from a propaganda lecture

By David Snowball

The phenomenon of carefully, continuously engineered noise and distraction is neither new nor benign. Each year for the past quarter century, I’ve ended the last lecture of my Propaganda in the 20th Century course with a reading from Milton Mayer, They Thought They Were Free: The Germans, 1933-45 (University of Chicago Press, 1955).

Mayer, an American political scientist, traveled to Germany in the early 1950s to speak with German Nazis. He was dissatisfied by the existing analyses of how Nazism came to be, and hoped that intimate interviews with ten Germans who became Nazis might help him come to understand.

This excerpt comes from Chapter 13, a discussion by a university professor.

“What happened here was the gradual habituation of the people, little by little, to being governed by surprise; to receiving decisions deliberated in secret; to believing that the situation was so complicated that the government had to act on information which the people could not understand, or so dangerous that, even if the people could understand it, it could not be released because of national security. And their sense of identification with Hitler, their trust in him, made it easier to widen this gap and reassured those who would otherwise have worried about it.

“This separation of government from people, this widening of the gap, took place so gradually and so insensibly, each step disguised (perhaps not even intentionally) as a temporary emergency measure or associated with true patriotic allegiance or with real social purposes. And all the crises and reforms (real reforms, too) so occupied the people that they did not see the slow motion underneath, of the whole process of government growing remoter and remoter. . .

“The dictatorship, and the whole process of its coming into being was, above all diverting. It provided an excuse not to think for people who did not want to think anyway. I do not speak of your ‘little men,’ your baker and so on; I speak of my colleagues and myself, learned men, mind you. Most of us did not want to think about fundamental things and never had. There was no need to. Nazism gave us some dreadful, fundamental things to think about — we were decent people – and kept us so busy with continuous changes and ‘crises’ and so fascinated, yes, fascinated, by the machinations of ‘national enemies,’ without and within, that we had no time to think about these dreadful things that were growing, little by little, all around us. Unconsciously, I suppose, we were grateful. Who wants to think?

“To live in the process is absolutely not to be able to notice it – please try to believe me – unless one has a much greater degree of political awareness, acuity, than most of us had ever had occasion to develop. Each step was so small, so inconsequential, so well explained or, on occasion, ‘regretted,’ that, unless one were detached from the whole process from the beginning, unless one understood what the whole thing was in principle, what all these ‘little measures’ that no ‘patriotic German’ could resent must some day lead to, one no more saw it developing from day to day than a farmer sees the corn growing. One day it is over his head. . .”

My students and I talk about the prospect that “bad stuff” – policies and the propaganda or media strategies that enable them – don’t just appear. They grow; they grow within us, fed by our uncertainty, tolerance and exhaustion. The essential tool, I argue, for confronting great injustice is to recognize and reject daily injustice: don’t tolerate demeaning comments, even when – perhaps especially when – they’re made by your friends. Don’t ignore the stranger in need. Don’t go for the cheap laugh. Don’t shake your heads and just walk away. Do today the things that will make you, fifty years hence, look back on with pride. Do today the things that will give you a decent answer to your child’s someday question, “oh, no! Well, what did you do about it, dad?”

Centaur Total Return Fund (TILDX), June 2018

By David Snowball

Objective

The fund seeks “maximum total return” through a combination of capital appreciation and income. The fund invests in undervalued securities, mostly mid- to large-cap dividend paying stocks. The manager has the option of investing in REITs, master limited partnerships, royalty trusts, preferred shares, convertibles, bonds and cash. The manager invests in companies “that he understands well.” The manager also generates income by selling covered calls on some of his stocks. As of February 28, 2018, the fund held 21 different investments, which Continue reading →

No country for old men

By David Snowball

With a summertime nod to William Butler Yeats, “Sailing to Byzantium,” and not so much to the movie that cribbed a line from him.

I

That is no country for old men. The young
In one another’s arms, birds in the trees,
—Those dying generations—at their song,
The salmon-falls, the mackerel-crowded seas,
Fish, flesh, or fowl, commend all summer long
Whatever is begotten, born, and dies.
Caught in that sensual music all neglect
Monuments of unageing intellect. Continue reading →