Originally posted by sergeant
I'm not sure how a chart can determine the quality of of a fund manager's decision making. For instance, I'm aware of a few smallcap stocks that have reported seriously good growth in earnings in the last six months, and yet their share prices have halved. Hand on my heart, I cant say that the share price being lower has anything to do with the performance of management of these companies.
On a slightly different matter, how do you stand on LIC's holding a very high percentage of cash during these times? If I invest in an LIC its because I want to see the capital deployed not sitting on the sidelines. I can easily sell some of my LIC holdings to achieve the same result without paying the management fee, thereby reducing my risk. I'm not saying Karl is overweight cash, (unlike some of his peers!) but isnt the job of a fund manager to invest?
Sarge..in Karl’s defence, an investment manager needs to know when to hold them and when to fold them. That does away (or should do away) with the need to be transfixed to the screen and become financially astute yourself. An LIC I have (CVF) is currently holding 74% cash having made good gains on APT and other stocks. That leaves them in a good position to “pounce” on any low hanging fruit.
I agree with
@govr, that the funds underperformance is due to other reasons than the % of cash held, and is more about stock selection, management and timing.
the ability to go to cash is no different than the property situation in Sydney and Melbourne. If you were a property investor, it would be wise sitting on cash, rather than having borrowed heaps and buying at the top of the market. SPS in small and micro cap stocks have fallen the most, despite some good results, because of liquidity issues. Unfortunately small and micro caps stocks generally tend to rise only after the top 100s have already risen. We may be waiting for quite some time.
just my perspective.
(20min delay)