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I sometimes wonder what would have happened if Peter Lynch didn't retire in 1990. Could he have kept it going, or would his magic touch disappeared? Over a 13 year period, he put up 29% annual returns. I don't think it would have lasted, even if Fidelity shut the doors on Magellan to prevent asset bloat. I just don't know what to make of Giroux. I keep watching for him to stumble, although I invest in PRWCX so I am not hoping for that to happen.
You’ve got me wondering if he’ll “pull a Lynch” and get out at the top. No sign of that. Doesn’t seem like the type. I do suspect some of the faithful herd will become disenchanted when they realize TCAP is more volatile than PRWCX. it lost nearly twice as much yesterday, and lagged today by a bit. That divergence is fine in a strong bull market; but a bit unpleasant on the way down.
Just thinking - Lynch had a keen wit, an engaging personality, a noticeable degree of humility coupled with an ever inquisitive mind and a strong desire to share his principals of investing with anyone who would listen. For all his success (not to be denied) Giroux is no Lynch..
There was a good article about Peter Lynch on Yahoo Finance yesterday.
"Lynch headed up one of the most lauded mutual fund successes in history. During his tenure, Fidelity’s Magellan fund racked up a 29.2% average annual return for those investors who held the shares throughout. In other words, if you invested $1,000 in Magellan on May 31, 1977, and held on until May 31, 1990, that small investment would have ballooned to around $28,000. It was the best-performing mutual fund in the world under his watch, climbing from around $18 million in assets to over $14 billion with over a million shareholders. 'One out of every 100 Americans was invested in Magellan at the time of my tenure,' he said." Link
Amazing results and he had the good judgement to get out while on top (unlike Bill Miller). His books were pretty good too!
Lynch was great, but he did it when a lot of information wasn't available and most investors didn't have an easy access to all the tools we have in the last 20 years. See below BRK.A performance. It is very clear that the best performance was in the 70-90s and it's probably a similar reason. BRK.A performance in the last 20 years trails SPY(https://schrts.co/SvTMAdUw).
And you forget that Giroux superior risk-adjusted performance while investing usually in 60-65% stocks makes his case stronger + AUM is much bigger.
Jack Hough from Barron's writes about perceived problems with the 60/40 asset mix. Jared Woodard, head of the Research Investment Committee at BofA Securities, states there is strong evidence that 60/40 is broken now. He believes investors in popular index funds will be disappointed in the future. Mr. Woodard suggests investors pursue "less-crowded sources of yield and growth."
"BofA recommends preferred stocks for high, stable yields through, for example, the Global X U.S. Preferred ETF (PFFD); municipal bonds for relative value, as in iShares National Muni Bond (MUB); convertible bonds for growth and yield, like in SPDR Bloomberg Convertible Securities (CWB); and a smidgen in something short and safe, such as Schwab Intermediate-Term U.S. Treasury (SCHR)."
"For the stock side, BofA Securities estimates that equal-weight index funds such as the Invesco S&P 500 Equal Weight ETF (RSP) are now priced for double the return of traditional funds that weight companies by market value."
You can do a lot worse than 60/40. A good example is someone who owns 10-15 funds...or someone with overlapping securities, underperformance, and diversification that isn't good enough. Blackrock have an interesting article about it. As expected, they also try to sell you these funds https://www.blackrock.com/us/individual/insights/60-40-portfolios-and-alternatives Key points * The 60/40 portfolio today – Inflation poses a challenge to the traditional stock-bond portfolio. The diversifying nature of the two assets can be sensitive to the level of inflation, which makes rethinking portfolios more critical than ever. * Rebuilding resilience – A sensible evolution of portfolio construction can include complementing traditional asset classes with alternative sources of return that provide additional diversification. * Three Ds of alternative diversifiers – When looking for liquid alternatives that can improve portfolio resilience, we believe buyers should look for diversification, durability, and defensiveness.
"...I keep watching for him to stumble, although I invest in PRWCX so I am not hoping for that to happen."
Me, too. And it puts a smile on my face to see the fund is up ytd by over ten percent, tonight. Fingers crossed. My other AA fund is BRUFX. Stinky poopy so far, in '23.
I "love" Bofa predictions. See what they said on 12/28/2022 (https://www.businessinsider.com/stock-market-volatility-2023-investing-strategy-sp500-bank-america-subramanian-2022-12) Bofa recomendations were: 1) Subramanian said she sees stocks going through a volatile period in the first half of 2023 as a recession hits the US economy. 2) avoid the S&P 500 index and mega tech 3) Her most-preferred sectors for 2023 are energy, financials, consumer staples, and utilities.
Reality: 1) Volatility wasn't high in the first half. In fact the indexes were nicely up 2) YTD...SPY made 14.8%...QQQ 37.3% 3) Subramanian preferred categories YTD performance...XLF -3.3%...XLE -7.1%...XLP -0.2%...XLU -7.8%
If you follow the above you missed at least 15-20%. Let me know another profession you can keep your job and be so wrong so many times.
Comments
Just thinking - Lynch had a keen wit, an engaging personality, a noticeable degree of humility coupled with an ever inquisitive mind and a strong desire to share his principals of investing with anyone who would listen. For all his success (not to be denied) Giroux is no Lynch..
"Lynch headed up one of the most lauded mutual fund successes in history. During his tenure, Fidelity’s Magellan fund racked up a 29.2% average annual return for those investors who held the shares throughout. In other words, if you invested $1,000 in Magellan on May 31, 1977, and held on until May 31, 1990, that small investment would have ballooned to around $28,000. It was the best-performing mutual fund in the world under his watch, climbing from around $18 million in assets to over $14 billion with over a million shareholders. 'One out of every 100 Americans was invested in Magellan at the time of my tenure,' he said."
Link
Amazing results and he had the good judgement to get out while on top (unlike Bill Miller).
His books were pretty good too!
And you forget that Giroux superior risk-adjusted performance while investing usually in 60-65% stocks makes his case stronger + AUM is much bigger.
https://www.1stock1.com/1stock1_2729.htm
Jared Woodard, head of the Research Investment Committee at BofA Securities,
states there is strong evidence that 60/40 is broken now.
He believes investors in popular index funds will be disappointed in the future.
Mr. Woodard suggests investors pursue "less-crowded sources of yield and growth."
"BofA recommends preferred stocks for high, stable yields through, for example, the Global X U.S. Preferred ETF (PFFD); municipal bonds for relative value, as in iShares National Muni Bond (MUB); convertible bonds for growth and yield, like in SPDR Bloomberg Convertible Securities (CWB); and a smidgen in something short and safe, such as Schwab Intermediate-Term U.S. Treasury (SCHR)."
"For the stock side, BofA Securities estimates that equal-weight index funds such as the Invesco S&P 500 Equal Weight ETF (RSP) are now priced for double the return of traditional funds that weight companies by market value."
Link
Blackrock have an interesting article about it. As expected, they also try to sell you these funds https://www.blackrock.com/us/individual/insights/60-40-portfolios-and-alternatives
Key points
* The 60/40 portfolio today – Inflation poses a challenge to the traditional stock-bond portfolio. The diversifying nature of the two assets can be sensitive to the level of inflation, which makes rethinking portfolios more critical than ever.
* Rebuilding resilience – A sensible evolution of portfolio construction can include complementing traditional asset classes with alternative sources of return that provide additional diversification.
* Three Ds of alternative diversifiers – When looking for liquid alternatives that can improve portfolio resilience, we believe buyers should look for diversification, durability, and defensiveness.
Me, too. And it puts a smile on my face to see the fund is up ytd by over ten percent, tonight. Fingers crossed. My other AA fund is BRUFX. Stinky poopy so far, in '23.
Bofa recomendations were:
1) Subramanian said she sees stocks going through a volatile period in the first half of 2023 as a recession hits the US economy.
2) avoid the S&P 500 index and mega tech
3) Her most-preferred sectors for 2023 are energy, financials, consumer staples, and utilities.
Reality:
1) Volatility wasn't high in the first half. In fact the indexes were nicely up
2) YTD...SPY made 14.8%...QQQ 37.3%
3) Subramanian preferred categories YTD performance...XLF -3.3%...XLE -7.1%...XLP -0.2%...XLU -7.8%
If you follow the above you missed at least 15-20%. Let me know another profession you can keep your job and be so wrong so many times.
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A week ago (link)
MMM...maybe it's time to sell, after all subramanian said "The market is more rational than its been in a decade’"
More than a decade? did she look at what the SP500 made in the last 10 years? SPY made 225% in 10 years and QQQ made 460%.