Last year, Cathie Woods strutted around Wall St as a demi God with her 5 themes of the future.
To her credit, she xaught and rode the tech wave beautifully but fell into the trap of believing she was smarter than the market. 2021 has been very ugly for ARKK and her reputation.
Greg Matthews had a similar fate in the first half of the 2000s flying at Macquarie Funds Mgt then crashing and burning at ING after chasimg the big dollars.
Few public fund investors successfully traverse decades. Nielson did it at BT and Platinum. HD remains in that space but has been trampled on by globally irresponsible monetary and fiscal policy and the might of growth inspired momentum.
His calls in 2020 gave clearly come at great cost to his relative performance. They were the right calls but in the wrong market. This bubble appears one more leg left in it before serious and lasting damage to wealth becomes apparent.
As a younger and smaller investor in the 1968 to 1982 bear market, l can attest no one saw it coming. No one.
The 2020s may play out differently, but the ending will most likely be the same. Those incestors that naively believe governments are bigger than markets will learn a lesson that most have forgotten. Passive investing has outperformed in the last 15 years largely as a result of structural market interference suspending Newton's laws of gravity. Suspending it, not removing it.
I look forward to the response of index lovers when the rotation of stocks from growth to cyclical returns, year after painful year.
HD is clearly caught between the catastrophe he sees ahead and managing investor expectations. It is a classic conflict of interest for MFG.
As an investor in the MGF for a very long time l have confidence that the return of capital reality will outlast the return on capital hope.
Cathie Woods is now relying on hope for her star to keep shining. Hamish has to have a foot in both camps now that he is under pressure. That will mean he must take investment risks he would prefer not to, in order to avoid continued relative underperformance.
The debate over active and passive investment stules has existed for decades since index funds were launched by Vanguard. It is not a coincidence that they have coexisted only in the recent 30 year credit super cycle.
No one knows how the 2 will correlate under a deleveraging cycle where interest rates and persistent cost push inflation create a relatively unfamiliar investing environment. Under such conditions l suspect active managers will have a particularly unfair advantage as sector rotation is the Achilles heel of passive investing.
That in my view is 12 to 18 months away. The blink of an eye in the time horizon of long term investors, but death by a thousand cuts for the unaware.
We will see.
Managers like markets tend to to perform better in the conditions that suit their investment positioning. Assessing MFG performance is a fluid argument that no one can possibly resolve by a snapshot in time.
l am relieved that so many haters of HD and active managers carry an overwhelming voice. I will position my capital inconspicuously in the corner l believe will be best suited to longer term returns.
Investment noise is a useful distraction that has tended to favour contrarian investors for centuries. I am pleased it is offers me an opportunity to own MFG at a price l am prepared to pay. 12 months ago, MFG was so far outside my radar if value l had never considered owning it. Even a month ago it was just a thought.
Today, l am described as a "fanboi" to those with the attention span of an ant. How fascinating.
I remain quite prepared to see the SP decline over the next 6 months as mandates are potentially lost and fees are reduced.
For the same reason, over the next 18 months l believe new mandates will be won and a PE premium earned restoring at least 25% to the share price.
I understand some here scoff at earning 12%pa as many active fund managers have for a long time. Like them, I find it necessary to endure periods of pain to continue to continue to generate such returns.
In Recent years most precious metals, REE, lithium, graphite or uranium stocks have proved to be investment spectaculars, with 2x to 10x returns over the last 4 years.
Great for those who entered just when the time was right. I like many was not quite so lucky. Positions were taken 5 to 8 years ago amongst the bust years, needing much patience and much thick skin to remain invested when markets rewarded banks and growth stocks ahead of commodities.
Again it remains curious to me that simply staying the course has generated such outsized returns, as a privateindex unaware investor.
Maybe l am so conditioned to ridicule, l no longer feel it, as the rewards have been so consistent and so satisfying.
I hope readers can draw a little from my experience to frame their own investment expectations. This is NOT advice. Just experience. Some may find it helpful others may find it condescending. For me, it is a major product of my humble life.
If nothing else, l have found a long life to be interesting.
Good luck to all, whichever way you lean.
MFG Price at posting:
$21.72 Sentiment: Buy Disclosure: Held
(20min delay)