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Aronstein's Marketfield Fund Has $2.2 Billion Redemptions
And a very small portion of that $2.2b was mine. What it comes down to, really, is putting your money on a horse. The horse does good, or not. If the judgement of the manager(s) regarding the general market is good, you win, if bad, you lose.
These types of funds do not necessarily provide you with a definable "mechanism" or algorithm, so that you can decide if that's the way you want to handle things or not. You don't want to be in this type of fund unless you're willing to surrender your judgement to that of a manager who may be using who-knows-what to determine strategy at any given period of time.
Add to that the restrictions on mobility introduced by very large AUM figures, and it doesn't seem like a very promising methodology for the average investor. At least with old-fashioned balanced funds you have an idea of what the bets are and maybe even why. Live and learn.
Yes, I made exit of the fund back in July as I felt the large AUM base had made this fund too difficult to manage. A fund like this needs to be nimble so it can have good flexability to stay positioned within the faster market currents and when warranted make play in some special opportunities form time-to-time. I liked the fund a lot when it was nimble.
Antother fund that I left was Ivy Asset Strategy (WASAX). In my thinking, it too became to large to effectively position.
I wish somebody could explain to me how that "reality" conforms to the other "reality" expressed in one of JohnChisum's recent posts which says investors tend to hang on to their losers. Are there two different realities here?
I just don't keep losers. There are too many good funds that one can invest in to keep underperforming funds. After all, how long would you keep a sales rep that continued to under perform and not meet sales goals? Years ago, I learned there was only one rule that really applied ... If you can't sell ... you can't say. My job was to move those along that could not meet expectations. The old coach would say … “Old_Skeet fire them up or fire them out.” Same with a mutual fund ... If it doesn't perform to expectations ... find another one that can as there are many to choose from.
And, occasionally I will fire one and move to another … WASAX and MFLDX are examples as they are now history and no longer held within my portfolio. Simply stated they failed to meet my expectations and the outlook was not favorable that they would going forward. When the funds had a relative small to medium assets under managemnt base I did indeed made some good money from these holdings. However, as the AUM begin to bulk up that is when they began to lag and I noticed both were slow in their repositioning process and with this, I left.
There is some question among people as to when one should pull the trigger and fire the fund. Three years seems to be a common answer. Another answer is when the fund has changed its strategy or if the manager leaves with no visibility ahead. In the case of MFLXD, The "Olds" made their decisions when the fund didn't perform to expectations.
With funds like these (alternatives), maybe a tighter leash is required?
Yeah, I'm thinking so. If there is no clarity with respect to the expected management direction (i.e. since the management "strategy" can apparently change without notice, on the whim of the manager), then what measurement is possible other than "is it working now"??
Agree Old_Joe. With that said, communication is a priority here. The manager needs to communicate regularly with shareholders on market thoughts and what he/she is doing. A great example of failed communication would be Fairholme.
What I meant is ... John's article cites statistics showing that what we're seeing with MFLDX doesn't really happen. Abundant evidence that by and large we investors cling to loosing funds. I can't find anyone here who does that and the massive money flows out of MFLDX would indicate folks don't keep losing funds. Got me kinda confused. That's all. (probably too much sun:)
I just don't keep losers. There are too many good funds that one can invest in to keep underperforming funds. After all, how long would you keep a sales rep that continued to under perform and not meet sales goals? Years ago, I learned there was only one rule that really applied ... If you can't sell ... you can't say. My job was to move those along that could not meet expectations. The old coach would say … “Old_Skeet fire them up or fire them out.” Same with a mutual fund ... If it doesn't perform to expectations ... find another one that can as there are many to choose from.
And, occasionally I will fire one and move to another … WASAX and MFLDX are examples as they are now history and no longer held within my portfolio. Simply stated they failed to meet my expectations and the outlook was not favorable that they would going forward.
Old_Skeet
Nice post Old_Skeet, couldn't agree more. But I disagree with Hank as I see many here that cling to losers and/or underperforming funds and stocks. And then they recite 1001 reasons why they won't let go of such funds/stocks.
Not to belabor the point. ... If the manager's not performing fire him or her. Don't wait around. Run! And don't look back. Agree with Skeet 100%. Hell, I won't even touch those go-anywhere funds and haven't in a long time,
Now, if a sector's out of favor .... apply due diligence. A declining NAV is not in itself reason for me to sell. Depends on a lot of other factors. I realize not everyone sees it that way.
My other question about John's post was merely academic. I wondered when I read it several days ago. Didn't see where the guy's statistical analysis really supported his position. Than the article on MFLDX appeared and it made me question that earlier article even more.
@Junkster - I think you're right but in your case it's probably been your ability to adopt a 'trader's' mentality i.e. losses are part of the process and to be expected. Most people cannot accept the losses so they hang on in hope of recovering. You know how the rest of the story goes.
I enjoy it when Bloomberg (NY Times, whomever) has to go out of their way to point out someone in their stories is an Ivy League graduate, but neglect the education credentials of others mentioned in this story....
Aronstein, a 61-year-old Yale graduate, and Michael Shaoul, the chief executive officer of New York-based Marketfield Asset Management LLC ... . Shaol is obviously the schlep, not having an Ivy League pedigree...
What gets me about the discussion is todays loser is always yesterday's winner. Who is going to buy a fund that isn't performing, isn't a winner?
We tend to buy on the up cycle (winners) and sell on the down (losers). I'm slowly coming to the conclusion the bulk of a portfolio should be in index funds with maybe a couple trusted managed funds where you may be looking for risk aversion over return. The only place managed funds are starting to make sense are in very broad categories like international, EM and small cap funds where the market is so broad that stock picking is essential. Just my 2 cents.
@MikeM I agree 100%, except that it's difficult to find consistently good performing active managers in the international, EM and small cap areas as well. I still like active managers for bonds.
Difficult loss on national TV last evening. I'll be interested to see what happens with the new stadium. I hope none of my taxpayer dollars is used for it. Maybe Pegula could pay for it himself with his fracking profits.
Here's a link to the fund's investor returns over the past 1, 3, and 5 years. What a contrast to the fund's actual returns. Bottom line: Many investors didn't participate in the up years but are participating in the down years.
Hi Bitzer. Yeah, same ol' quarterback and offensive play calling problems. Questionable penalty calls by the refs didn't help either, but Miami was the better team last night. I have no problem using state tax money for a new stadium. Hell, they'll just spend it on something new for those rich NY city teams if Buffalo doesn't get it, or should I say New Jersey teams.
@MFO Members Roy Weitz built the greatest Mutual Fund Website on this principle, know when to hold, and know when to fold. Regards, Ted Kenny Rogers: The Gambler:
@Old_Joe: You are correct, and also liked to use this analogy. He liken the list of 3-Alarm Funds to the smoke detector. If it goes off, your house could be on fire. But it could also be cobwebs in the smoke detector, in which case you just change the batteries and go back to sleep. Regards, Ted
Comments
These types of funds do not necessarily provide you with a definable "mechanism" or algorithm, so that you can decide if that's the way you want to handle things or not. You don't want to be in this type of fund unless you're willing to surrender your judgement to that of a manager who may be using who-knows-what to determine strategy at any given period of time.
Add to that the restrictions on mobility introduced by very large AUM figures, and it doesn't seem like a very promising methodology for the average investor. At least with old-fashioned balanced funds you have an idea of what the bets are and maybe even why. Live and learn.
Recent struggles appear unrelated to asset bloat, as major macroeconomic bets have reversed course. The fund tried to juggle too many balls at once
Regards,
Ted
MFLDX Performance: http://performance.morningstar.com/fund/performance-return.action?t=MFLDX®ion=usa&culture=en-US
Antother fund that I left was Ivy Asset Strategy (WASAX). In my thinking, it too became to large to effectively position.
Old_Skeet
http://www.mutualfundobserver.com/discuss/discussion/16929/why-can-t-investors-let-go-of-their-portfolio-s-losers#latest
I just don't keep losers. There are too many good funds that one can invest in to keep underperforming funds. After all, how long would you keep a sales rep that continued to under perform and not meet sales goals? Years ago, I learned there was only one rule that really applied ... If you can't sell ... you can't say. My job was to move those along that could not meet expectations. The old coach would say … “Old_Skeet fire them up or fire them out.” Same with a mutual fund ... If it doesn't perform to expectations ... find another one that can as there are many to choose from.
And, occasionally I will fire one and move to another … WASAX and MFLDX are examples as they are now history and no longer held within my portfolio. Simply stated they failed to meet my expectations and the outlook was not favorable that they would going forward. When the funds had a relative small to medium assets under managemnt base I did indeed made some good money from these holdings. However, as the AUM begin to bulk up that is when they began to lag and I noticed both were slow in their repositioning process and with this, I left.
Old_Skeet
With funds like these (alternatives), maybe a tighter leash is required?
Look how many people rode Steadman all the way down. Maybe they thought an Oceanagraphic fund was supposed to do that?
Now, if a sector's out of favor .... apply due diligence. A declining NAV is not in itself reason for me to sell. Depends on a lot of other factors. I realize not everyone sees it that way.
My other question about John's post was merely academic. I wondered when I read it several days ago. Didn't see where the guy's statistical analysis really supported his position. Than the article on MFLDX appeared and it made me question that earlier article even more.
Aronstein, a 61-year-old Yale graduate, and Michael Shaoul, the chief executive officer of New York-based Marketfield Asset Management LLC ... . Shaol is obviously the schlep, not having an Ivy League pedigree...
We tend to buy on the up cycle (winners) and sell on the down (losers). I'm slowly coming to the conclusion the bulk of a portfolio should be in index funds with maybe a couple trusted managed funds where you may be looking for risk aversion over return. The only place managed funds are starting to make sense are in very broad categories like international, EM and small cap funds where the market is so broad that stock picking is essential. Just my 2 cents.
Difficult loss on national TV last evening. I'll be interested to see what happens with the new stadium. I hope none of my taxpayer dollars is used for it. Maybe Pegula could pay for it himself with his fracking profits.
http://performance.morningstar.com/fund/performance-return.action?p=investor_returns_page&t=MFLDX®ion=usa&culture=en-US
Regards,
Ted
Kenny Rogers: The Gambler:
https://web.archive.org/web/20110305001126/http://fundalarm.com/
Regards,
Ted