I am not a fan of Magellan. Just telling buyers - beware !!!
Best managers are not always the best short term performers.
Portfolio Construction at its heart accepts different assets, funds, or stocks do well at different times. Staying the course is the challenge.
“Tools of selling” are at odds with “tools of investing”.
Every salesperson knows “How to win friends and influence people” –the 1930sbook remains a bestseller: Listen, Take an interest, smile, use peoples’ names. Above all, avoid disagreement, conflict, arguments. However, most successful fund managers have a contrarian bent, they take the market on…
... unless a fund manager takes on the market they accept the market is right and If they accept the market is right, an ETF will replace them! Successful investing is often about challenging consensus thinking.Fund managers exploits Personification, Slogans, Familiarity and Story-Telling.
Personification is epitomized by profiling and celebrating Star Fund Managers. Meanwhile evidence suggests funds with multiple portfolio managers generate better results. The importance of organisations over individuals is confirmed in work by Boris Groysberg on Stockbrokers, Klaas Bakson Mutual Funds, and Ben Darwin on sporting teams. Most ambitious start-up managers learn this once beginners luck wears off but genuine investment houses far outlive their founders.Slogans cut corners and are led by whatever’s hot at the time. Today, the word disruption feels overused, yet it’s been happening since the Industrial Revolution. We hear back, unchallenged, agreeable wisdom that sounds convenient.
Familiarity is another problem. In our sphere of global investing, many used to ignore overseas stocks, using exporters as their ticket to the world. Buy Nestle because everyone drinks coffee, buy Apple because everyone has an iphone or buy Colgate because everyone cleans their teeth. This ignores price, the key driver of returns. Well-known companies are often fully-priced.
Storytelling has passed wisdom down through generations. However, well-crafted, carefully selected, engaging stock stories delivered by strong and entertaining presenters will often have already performed. Charlie Munger noted it’s hard to separate true knowledge from a learnt show full of eloquent words, phrases and ideas. Jargon is often used to sound authoritative. Ambiguous answers are common place but “markets could go up or down from here” is as valuable as a horoscope.
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