Due Diligence

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Can’t Trust’em

It pays to be skeptical of financial product pitches.  Investments that are sold rather than bought are often inferior and loaded with fees.  Marketing (even for good funds) is filled with cherry-picked data, but that’s the job of the marketing folks – make the product look good.  However, sometimes a pitch comes across my desk that goes beyond marketing and makes me wonder whether the money manager is dishonest or just incompetent.  Either way, they get filed under ‘Can’t Trust’em’. The latest entry into my ‘Can’t Trust’em’ file is a manager that absolutely crushed the S&P 500 over the last 10 years.  They lost a ton less than the index during the crisis and were up over 60% in 2009.  Returns for other years were pretty middling, but they shined when it counted the most, right?  I looked around on their website a bit and found a document called ‘BACKTEST’. …

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An Anniversary and Some Words on Garbage

This week marks the anniversary of the bull market whether you measure from the intraday bottom on 3/6/2009 or the day’s closing bottom on 3/9/2009.  It’s not as simple as all that, though. After a 19% annualized gain or over 300% cumulative, it’s hard to ignore claims that the market is over-valued.  Sure, the doom and gloom folks have been saying that all the way up, but it’s getting harder to find statistics that don’t show the market at least fairly valued.  JP Morgan’s David Kelly shows P/Es slightly above historic averages, but the Shiller CAPE is really elevated. Some things to keep in mind After a long run, it feels like we are due for calamity or at least a pullback.  We’ve already had a pullback – four of them, in fact.  And we only need to look at last year to remind ourselves that the market’s rise was…