If doing nothing routinely does as well as doing something
by 88_92WSND (2018-12-11 08:02:49)

In reply to: They are another way for the casino to win the game  posted by The Flash

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why pay to do something?
Paying for stock augury when augury provides little insight seems foolish, writ large, even if it does mean that the augury industry suffers. As for augury uncovering bad companies, how many augurs predicted the 08, how many augurs predicted Enron, etc?

a lot of asset management firms missed out on Enron's
by irishrock  (2018-12-11 08:13:56)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

carnage

what's interesting about portfolio management and passive investing is that it isn't always what you own that can hurt you (vis a vis the index) it's what you don't own.

I remember sitting through a PM's presentation where Enron surfaced. The look on his face was horrific and sad. He starts muttering, "Enron was the worst part about my career. I was vindicated but the 18 months where it was running hot while I couldn't figure out why was horrible. My boss literally came into my office weekly and asked why I didn't own it."

I know there are many "index hugger" managers who may "hate JNJ, but I own it". If JNJ is, let's say 2.5% of the index, they may dislike the stock but allocate 1.5% of the fund to JNJ just because they are so benchmark aware.
I believe 18 analysts covered Enron and only one of them
by G.K.Chesterton  (2018-12-11 13:31:12)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

smelled a rat. He was ridiculed by Enron management whenever he asked tough questions.

He never felt like gloating because he knew how many people had been burned.