M*, Day 2: Bill Gross's two presentations Hi Professor David and MFOers,
With apologies to its author Elbert Hubbard, thank you for your Message to MFOers ( originally to Garcia). Your messages, in almost real time, of what’s what at the annual Morningstar Conference should permit us to take the investment initiative. So far that hasn’t happened. That’s not your fault. It’s like we are seated in the conference rooms with you.
It’s really not surprising that a fair review of the proceedings is almost always a mixed bag. Are the insights gleaned from the presentations worth the time and effort? Typically, these conferences generate a jumble of rubbish and a few gems. The wheat must be separated from the chaff.
For years (like 15), both my wife and I have been attending and even occasionally participating in the annual Las Vegas MoneyShow. Each year we question if the learning is worth the price. Yet each year we return with an optimistic mind-frame. Hope springs eternal. Fortunately we usually return home with a few nuggets of wisdom. So I suppose my answer is “yes”. Although the promises and expectations far exceed what is ultimately delivered, it is still a worthwhile time investment.
The Morningstar agenda at this conference is clearly directed at financial professionals. That suggests that the presentation bar should be set a bit higher given the likely sophistication of the audience.
Based on your summary reporting, the bar standard is unacceptably too low, or perhaps, the presentations are so generic or fuzzy, that the bar height can not even be accurately defined. That too is bad, but it is not a shock either. If the presenter actually had a special forecasting insight or investment preference, he/she is not likely to freely reveal it to a non-subscribing audience. If I were the presenter, I would reserve this gem for my paying clients.
I find it somewhat puzzling why a few MFO members are so short-tempered and even hostile towards Morningstar’s limitations, errors, and costs. Research and data collecting costs money. Folks are imperfect and blunders are made despite the best organizational, structural, and double-checking safeguards. Accepting that reality, I adopt a more forgiving posture. Even my Toyota was delivered with several minor flaws which the manufacturer quickly corrected.
I’m not advocating the elimination of skepticism. A skeptical attitude is needed when making all investment decisions. However, it has a limit to its usefulness. It has the usual diminishing returns characteristic. At some point, it detracts from permitting a timely decision from being made.
Morningstar is one of the preeminent mutual fund data sources available to us individual investors. Overall, it has served us well. How do I know this?
It has a growing legion of loyal customers who trust its services. It attracted a huge number of professionals at this session who were willing to invest time and to pony-up 795 dollars to attend these sessions. Its sponsor and exhibitor lists are impressive. It has a history that dates back to when Peter Lynch managed the Magellan fund. Morningstar must be doing something of service to the investing public.
Since it is a successful enterprise, it must be a win/win scenario for both the buyer and the seller. Otherwise money would not change hands. Morningstar is prosperous and expanding; it continuously tries to improve its products. Certainly not all of these experiments are successful or equally useful for its disparate customer base.
Early in its history, Morningstar was very weak on analytical talent. Originally they hired professionally trained writers while passing on market analytical/investment types. Eventually, Morningstar recognized that shortcoming and integrated Ibbotson into their team. As an elite provider of investment data and analyses, Morningstar is committed to keeping its edge. Sometimes their efforts work; sometimes these efforts fail. It is up to their users to assess the merits of these exploratory projects for their special circumstances.
It is far too easy to be a constant critic. The bad is overemphasized while the good is swept away without acknowledgment. If the Morningstar presentations are too dull or too inept, the answer is simple enough: abandon the ship.
As usual, Warren Buffett had a succinct and wise way of putting it: “ Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
Regardless of its shortcomings, I plan to continue using Morningstar as a primary mutual fund data resource. In the end, it is my responsibility to critically examine that data to judge its reliability prior to making a decision.
Your description of Bill Gross’s weird behavior is reminiscent of a like event at the recent Las Vegas MoneyShow. At that event, Ken Fisher made a presentation that seems to be a mirror image of Gross’s misstep. It was totally not decipherable and made no sense whatsoever. To be generous, everybody has a bad day. Perhaps it was caused by the Chicago air compared to the Newport Beach air? Nope, these guys are just being human.
We are often Fooled by a Random Success. I capitalized the phrase because I coupled a Nassim Taleb saying with a contribution from an old friend. Even tossing 10 consecutive heads doesn’t mean we’re in control. Luck is always an investment component. For what it’s worth, we each have a 1 in 1024 probability of tossing 10 straight heads. Not likely, but doable.
Professor, please keep the report flow coming. I wish I were there with you.
Best Regards.
M*, Day 2: Bill Gross's two presentations Mr. G, recent actions and departures of staff over the past few months was discussed a few months ago here; and my main concern remains as to the morale of all managers and the "in the background" staff at Pimco.
Many of us have access to a variety of bond funds, with many funds having very acceptable performance; relative to Pimco's Total Return fund.
One Pimco fund we hold ( PIMIX ), is one that I hope we are able to keep; at least until we might choose to sell for our own reasons, and not reasons that may result from performance problems internally modified at Pimco from a poor morale culture.
I note the morale issue; as I have been involved in this circumstance within a large national/international company. Twenty years of fine performance with a tight team of 15 people, being disrupted by a manager who no longer "had a grasp" of events. The team lost members and was never again of established quality. The "morale factor" played a large role in destroying the team and, of course; the performance suffered.
Regards,
Catch
