Just for Fun. Opinions Will Vary.
Quick Summary1. Graham
2. Templeton
3. Price
4. Neff
5. Livermore
6. Lynch
7. Soros
8. Buffett
9. Bogle
10. Icahn
11. Gross
http://www.investopedia.com/slide-show/worlds-greatest-investors/For their contributions to financial and investment
literacy during my day, I'd select Louis Rukeyser - and toss in Templeton and Lynch for good measure. Much of this relates to their ability to communicate and inspire.
Comments
Here is flip side of my record.
I'm thinking, the father of indexing Jack Bogle belongs on this list as much as anybody.
Had indexing been readily available when I first started investing back in the late fifty's early sixty's perhaps more of my money would have been indexed. Back then, there just were not near the choices that there are today.
Old_Skeet
Conspicuous by his absence.
(The "Price" on the list refers to Thomas Rowe Price, Jr., founder of T. Rowe Price.)
Yahoo - bought on spec (expected buyout by MSFT) in 2008, quit the board in 2009 saying that CEO Carol Bartz was great (her 2009 pay earned her the title of most overpaid CEO); Icahn then sold out in 2010. No interest in building a business once he failed to turn a quick buck.
https://www.wired.com/2009/10/icahn-to-yahoos-board-my-work-here-is-done/
http://www.webpronews.com/carl-icahn-cuts-stake-in-yahoo-again-2010-05/
And I would also add "ol' what's his name," from Fido Low Priced Stock. Joel Tillinghast (sp?). Even Danoff from Contrafund.
Maybe a difference should be made between impactful, and great. Bogle would definitely be the former.
Given that over many decades, multiple thousands of investment advisors and fund managers are candidates for superior performance accolades, the rather short list proposed by various MFOers endorsements speaks volumes about the shortfall of great manager numbers..
None of this is surprising. Study after study finds that active fund managers have considerable difficulty scaling their benchmark wall. Their overall stats are consistently disappointing, especially when the measurement period extends to 10 or more years. Persistent outperformance is a tough nut. Here is a Link from a recent survey that addresses this issue:
https://www.ft.com/content/fddca86c-7ab7-11e6-ae24-f193b105145e
This Financial Times article concludes that over the most recent 10-year timeframe, 87.5% of domestic equity funds underperformed their benchmarks. That sure makes selecting likely winners from that category of funds a challenging task. Other fund categories offer better odds, but even these suffer performance degradation over time. It's tough to be a winner, but even tougher to,stay a winner.
Do you guys remember the Masters Select group of funds? It was conceptually a terrific idea. The funds would be managed by a team of managers who had established themselves as superior stock pickers. I bought into the idea when originally offered. After many years and many management changes, the fund I purchased became the Litman Gregory Masters Equity Fund. Potential aside, the results disappointed with a negative long term Alpha. I no longer own this fund.
By the way, I propose that Charlie Munger be added to the list of greatest investors.
Should any MFO contributor be added to the list? I am silent on this matter.
Best Wishes.
It macht nichts to me if you call this select group of investors great or greatest; that distinction is far too nuanced for my simple definition of a productive active mutual fund manager. I simply search for one who just might generate a positive Alpha with acceptable risk over some extended time.
The referenced Financial Times article demonstrates across many investment categories that it is a hard criteria to satisfy, especially over a respectable timeframe. The simple truth is that only a very small percentage of active fund managers outperform their benchmarks over time. Good luck on picking those winners ahead of time. There's a lesson here that reinforces the wisdom to minimize portfolio costs.
Thank you for expanding my discussion on funds guided by a team of supposedly super-managers. I don't know the performance records of the teams you referenced, but the team I identified didn't deliver on expectations.
"If you align expectations with reality, you will never be disappointed." That's a lesson I learned from football wide receiver Terrell Owens. It's one reason why I'm slowly converting actively managed funds in my portfolio into equivalent Index products.
Best Wishes.
I just want to make clear I didn't intend this simple list to be all-inclusive, definitive, or absolute. There were other sources with different lists. Frankly, this one wasn't encumbered by a lot of advertising. subscription pitches, etc. And I thought the brief snippets that accompany each's photo illuminating.
What is it than? It's a list of investors who have made significant unique contributions to the field of investing. Some did reap outsized returns. Others pioneered unique approaches (the reason I wish value investor Michael Price were included). Some, like Graham, wrote books that many still hold as gospel today. And two or three were gifted communicators who inspired many, like myself, to believe they could greatly improve their futures thru investing in equities at an early age.
The thought that these 11 mortals might not have acquired the highest batting averages over their long investment careers never occurred to me. Surely there are other hallmarks of greatness in one's lifetime and in one's career. I'm appreciative that others have critiqued the list (harshly in some cases) or suggested better names for inclusion.
Is the thread mis-named? Perhaps. Wouldn't be the first time. Than again, that depends on one's definition of greatness.
Is it possible that there are some very good investors out there that very people know about?
Of course, if one were very good (and had a track record to prove it), there is that temptation to cash in by becoming well known and raking in the fees.
It used to be that "Each manager will run a fixed percentage of the Fund's portfolio and invest in a maximum of 15 stocks." But nowadays, "There is no minimum or maximum allocation of the Fund’s portfolio assets to each sub-advisor. "
That might have happened when the funds got rebranded as Litman Gregory (I haven't checked). “The funds' new names better reflect our role as advisor to the Litman Gregory Masters Funds” (a more active role, perhaps?)
To Hank's point about not looking at investment simply as a batting average, it's easy to come up with other investors. For example, Felix Rohatyn,. The NYTimes writes: "Mr. Rohatyn spent most of his career as an investment banker at Lazard Frères, where he is credited with elevating the art of corporate mergers and acquisitions." (Link is in original article.)
Conversely, if what matters is batting average, why not include Edward C Johnson III, who bested Lynch's record at Magellan? (Ned averaged nearly 4x the S&P's return, vs. Lynch's nearly double).
Another possible reason--one you would never hear discussed--is that these funds may not actually have the managers' best ideas and they may not get the best execution on the stocks purchased. Why would a manager with his/her own fund company give first crack at his/her best ideas to an outside shop? Some of a managers' best ideas may be smaller positions in their funds they are just beginning to buy, not the biggest positions they've held for a while.
Another reason is many of these master-type funds tend to hire managers after they've already had a very successful run and their funds are now bloated, their managers not as hungry for success because they've already succeeded and their funds and/or style are now about to start lagging.
Another reason is fees of course--this must always be considered.
Finally, there is just plain bad luck and bad timing. It happens to the best managers just as good luck and good timing can happen to the worst. It's often hard to tell which is which.
The other was cost (which I did mention above). In comparison to Masters (and to Managers), Vanguard isn't here to make a profit, and the AA funds were started in-house for employees, again not with profits as the objective.
I'm not so sure concentration was a problem, at least originally, when allocations were fairly evenly split and static. Under those conditions, while a single stock might represent 5-10% of a single manager's sleeve, it would only represent about 1-2% of the entire fund. That changes if a third or more of the fund is given over to a single manager.
In no way did I anticipate this tsunami of submittals that discuss Masters Select funds when I referenced them in my original post. I thought I made a harmless comment. Why the many MFO exchanges discussing that outfit?
I merely used them as an illustration of an organization that seemingly had a good concept (multiple star fund managers with modestly focused holdings constraints) with respectable execution, yet would still struggle with underperformance over time. It"s a tough business with outcomes that defy easy explanation. I agree that the luck factor is universally present in any investment so risk control is of primary importance.
Is this yet another example of too many cooks spoiling the broth? Litman Gregory have always assembled a superb team of fund managers with outstanding and long standing records. That's not enough to generate positive Alpha or impressive Sharpe Ratios. It seems as if most of our investment Gods have feet of clay.
Constructing a portfolio of actively managed funds is hazardous duty. Vanguard minimizes the risk by keeping costs to a minimum. That's just the opinion of an amateur investor who has tried it many ways.
For a long time now, Warren Buffett has been saying that the best thing the average investor can do is buy an index fund over time. I'm finally coming around to that same conclusion. I'm a slow learner.
Best Wishes.
The Masters funds certainly started out that way. Shelby (not Chris) Davis, Jean-Marie Eveillard (as Lewis noted), Foster Friess et al., Mason Hawkins, Sig Segalas, Dick Weiss. All of whom had, as you wrote, fine long established records when they were hired.
But how about Jack Chee, who never managed a fund before being added as a co-portfolio manager to a couple of the Masters funds in 2014? Or Arik Ahitov, who likewise had not managed a fund before being added as associate manager to FPA Capital (FPPTX) and Masters (MSSFX) in 2013? (He was promoted to manager in 2014 at those funds.)
Then there's Ethan Steinberg, who was added to a couple of Masters funds in 2011, at the same time he got his first portfolio management assignment at Brandywine. Sure, Brandwine was a fine house back in the days when Friess was managing there. But not in the past decade. Did Litman Gregory stop hiring managers and start hiring management companies based on past reputation?
Maybe some of these guys were great with private accounts before being handed their first RIC management gigs by Litman Gregory. That's a lot to take on faith. Or maybe things changed more than you noticed. If so, then this is not an example of the approach failing, but of a management company (Litman Gregory) having lousy (not "respectable") execution.
You wrote that these are all superb managers, and that you make no distinction between "great" (synonym: superb) and "greatest". Are you seriously telling us that the guys I named, and more, are all some of the greatest managers?
You seem very exercised over Litman Gregory's current fund management selection process. I am not. At the present time, I have no skin in their game! I abandoned their ship a number of years ago and do not plan to invest with them again. Today, I'm more inclined to,choose passive Index products.
I did invest in their MSEFX fund when it was originally put on the market. I liked their plan to select multiple managers using a disciplined manager selection process that included continual performance monitoring. The detailed multistage selection process was the cornerstone of their marketing campaign.
That was then. Today, I have no idea how Litman Gregory is currently implementing their manager hiring plan or if they have modified it in any significant way. Things change, especially in the investment and business worlds. As I mentioned in an earlier post, presently it macht nichts to me.
I'm impressed by your detailed knowledge of the Litman Gregory team members. Your comments suggest that that firm has greatly relaxed their hiring standards. That.'s a significant input for anyone who owns or is considering a purchase of their products.
Why are you so familiar with Litman Gregory? Do you work in the financial or investment advisory industries?
Of course there is a distinction between great and greatest of anything. You are reviewing my posts with a microscope at too high a magnification setting. In the opening paragraph of my first post I did use the term "great" to describe the list that was indeed titled greatest. Sorry that I offended your sensitivities. Later, in that same submittal, I offered Charlie Munger as a potential addition to the list of greatest investors (EDIT: I specifically used "greatest" in my original reply). That certainly is inconsistent. You are making much over something of little importance. It certainly may be sloppy writing, but it is of no consequence.
Best Wishes
Quick, look at the squirrel. Irrelevant. FWIW, all one need do is check the management pages on M* and the original and current prospectuses from the SEC site. Not rocket science.
You felt that "the results disappointed with a negative long term Alpha" and that "the team you identified didn't deliver on expectations." As you subsequently clarified, the team you identified was the original team: "I did invest in their MSEFX fund when it was originally put on the market."
Here's the problem: that team only lasted two years. Hardly long term performance. Since you say your writing is sloppy, let's cut a little slack here. Let's figure that you were talking about a reasonable approximation of the original team.
So let's look at the first five years (still not really long term), rather than just the first two. A couple of management company changes and a couple more intra-company manager changes. For a fund with six sleeves, that's a far cry from the team you identified. But we've got to start somewhere with "long term".
That original team (and its successors) turned in a five year performance (annualized since inception) of 13.53% annualized, compared with 9.69% for the Wilshire 5000 and 9.31 for its Lipper peers.
We can also look at the performance over the first 10 years after inception: 10.12% vs. 8.64% for the R3K and 8.34% for its Lipper peers.
Not too much later - in mid 2008 - there was a whole bunch of changes at once. Six new managers and a couple of new management companies (Sands and Turner in, TCW and Legg Mason out). Clearly no longer the team you identified.
You also wrote in your last post: "As I mentioned in an earlier post, presently it [how the fund is run] macht nichts to me."
Not exactly. What you had actually written was: "It macht nichts to me if you call this select group of investors great or greatest; that distinction is far too nuanced." You did later walk that back, saying: "Of course there is a distinction between great and greatest of anything."
To use one of your favorite domains, how long a list would you get of greatest baseball players? People would name the Babe, Hammerin' Hank, the Say Hey Kid, and a handful of others. But construct a list of great ballplayers, and you'd be adding the Mick, Brooksie, Roberto, the Killer, Joltin' Joe, on and on. That the list of greatest players is short hardly "speaks volumes" about the large number of great ballplayers.
Likewise, one cannot say that "the rather short list [of greatest investors] proposed by various MFOers endorsements speaks volumes about the shortfall of great manager numbers". Unless the distinction between great and greatest macht nichts to MFOers.
I'm perplexed that you persue this matter with such angry persistence and in such an unfriendly confrontational manner. There is no need for such a biligerent attack, especially on a website dedicated to helping mutual fund investors. That's the singular purpose of my postings.
My major reason for purchasing MSEFX was my belief at that time that superior managers could be identified by research and would enhance future returns when assembled into a team of multiple managers. The multiple manager concept allowed for errors in the initial selection process.
Masters originally selected 5 teams and assigned each team equal weight. Over the years some teams were kept, others were replaced for various reasons. Certainly one reason for a replacement decision was performance disappointment. Although one unit might be underperforming, other members within the fund were likely generating positive Alpha outputs, hence the overall fund would still outperform some benchmark.
I kept the fund for an extended period. I don't recall when I finally sold it. But during my holding period, my belief that superior managers could be confidently identified ahead of time and would persist in their performance edge was slowly but surely eroding. Even with a carefully designed and meticulously practiced manager selection process, Masters was experiencing some disappointing team member outcomes.
I do believe that superior fund managers are out there awaiting discovery. The accumulated performance data demonstrate their existence. The list we are discussing identifies some of the folks that have earned that distinction and merit their inclusion on the list. There are truly exceptionally talented investors; not nearly a majority, but some small fraction.
I am not an active investor, but I still use past management performance as one of my selection criteria. It is not my sole criteria and is not as decisive a factor as in the past.
What I do and how I do it should not be the issue here. As a general rule, I do not make fund recommendations to MFOers. I am not qualified to do so. That declaration should not surprise anyone given my long standing acknowledgement in that arena.
Although I posted what I considered a rather innocuous comment about MSEFX based on my much earlier experiences with it, I made no recommendation to either endorse the Master series of funds or reject them now. That's not my style.
Speaking of style, you seem to take issue with my posting style, and not its substance. I suggest that is wrongheaded. This site is not about me. What appears to be a personal vendetta directed at me distracts from the purpose of this specific topic and the site's primary goal. That's too, too bad!
After all, hank introduced the topic "Just for Fun. Opinions Will Vary." I preferred to keep it on the fun level. Unfortunitly, we don't always get our wishes. Regardless.......
Best Wishes.
Believe what you will. What I try to do is point out errors of facts. That can be enough to call into question the reasoning and conclusions that flow from those "false facts".
As an example, even in this current post you got a couple of facts wrong. Fortunately nothing of consequence, but wrong nevertheless. Disconcerting is that you directly contradicted what I wrote and substantiated in this thread, as though you didn't believe it.
"Masters originally selected 5 teams and assigned each team equal weight."
No. Neither five (it was six) nor equal weight (it was 20/20/10/20/20/10). For your convenience, I've reproduced below the pertinent page from the original prospectus I'd previously linked to.
Looking at that page, it's easy to see where you might have gotten the impression that the fund always selected "managers with outstanding and long standing records". That was true of the first team (everyone with 20+ years experience), the team you said you had identified. But it was true only of that first team.
Perhaps you never read the subsequent prospectuses and just assumed that the fund continued to pick managers with long standing records. Or perhaps you just didn't remember details after that first investment. That's understandable, as the fund appears to have been launched with famous managers to make an indelible impression.
It doesn't matter. What matters is that you do get significant (and in this case insignificant) facts wrong, sometimes almost gratuitously. (There was no reason to mention five sleeves - it added nothing except evidence of an imperfect memory.)
You say that the fund had "a carefully designed and meticulously practiced manager selection process". What's the evidence for that? I don't doubt you believed that, just as you believed there were five sleeves. That's the problem when you get facts wrong. Everything becomes suspect.
Again, these are comments about factual errors and by implication any reasoning or conclusions that follow therefrom. That's not commenting on style, it's not belligerent, just reality-based. Reality, what a concept.
Well these exchanges seem to be endless. You are correct that I have an imperfect memory. I doubt that will shock many folks who likely are victimized by a similar shortcoming.
I also doubted any positive benefits from our exchanges until I was hit with a thunderbolt. I suddenly recalled that I participated in a similar MFO posting several years ago. Indeed that was the case.
I don't recall the position I took at that time, but that doesn't matter to me whatsoever. Things and thinking changes all the time. For what it's worth, here is a Link to that discussion:
http://mutualfundobserver.com/discuss/discussion/6956/finding-active-manager-expertise
I really don't care if it reinforces or weakens my current thoughts on this subject. Both were honest opinions at the time generated. I hope you enjoy my earlier writing. It will provide you with more targets to shot after. What a waste of time and energy!
I'm off to a Super Bowl party now. That's real fun!
Best Wishes.