Due Diligence


Outsourcing to an Absentee Investment Committee

They say there’s no such thing as a stupid question.  They are wrong.  Ask stupid questions, get stupid answers.  The Let Me Google That For You website is the perfect passive-aggressive answer to many stupid questions.  Rather than simply answering the question, LMGTFY provides a link that walks through the steps to google the answer.  For example, “How much does a polar bear weigh?”  Why do I bring this up?  As I have mentioned in other posts, sometimes all the due diligence you need can be found with a quick Google search.  Harry Markopolos says he’s uncovered some huge due diligence mistakes by the Boston Transit Authority (MBTA) and at least some of them would have been avoided with a quick internet search. Harry Markopolos If you’re unfamiliar with Harry Markopolos, he’s a modern day Cassandra.  Markopolos warned about the Bernie Madoff Ponzi scheme for years before it collapsed.  The authorities…

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The Tyranny of the Calendar

We are all beholden to the tyranny of the calendar.  Monthly or quarterly account statements tie a nice bow on a period of time, but can lend false significance to a time period’s returns. If you’ve got a brokerage account or 401(k), you probably got a statement ending on 6/30/2016.  As of the quarter end, the S&P 500 was up 3.99% over the past 12 months and 12.09% annualized over the past 5 years (77.02% cumulative). What if we look at the same performance, but ending a month later on 7/31/2016?  As of the end of July, the S&P 500 was up 5.61% over the previous 12 months and 13.37% over the past 5 years (87.36% cumulative).  What a difference a month can make! If statements were cut on 8/5/2016 we’d see an even bigger leap.  As of Friday, the S&P 500 was up 6.29% over the last 12 months and 15.18% over the past 5 years…