Investment consultant Charlie Ellis discusses the demographic and economic dynamics of emerging markets following a visit to Beijing.
Opinion
Jack Bogle carefully staged his personal origin story for journalists
“The only thing that's a real common denominator is Jack had this wonderful vision of who he was and how he wanted to be seen, and he nurtured that vision, and he had it down pat, so every journalist who came to spend some time with Jack would get the same stor…”
Assertion Supported
Investment committees drag performance by hiring and firing managers at wrong times
“Because the record is very clear that investment committees tend to fire managers at the wrong time and to hire managers at the wrong time, creating a drag on investment results they could otherwise have had.”
Assertion Supported
Most active mutual funds underperform decades-long benchmarks, guaranteeing indexers top-quartile performance
“85 to 90% of actively managed mutual funds underperformed the benchmark they have sought to be. Not every year, but every decade, every 20 years, and if you want to be in the top half of the top quartile, all you have to do is index, and you'd be there.”
Assertion Partly supported
Vanguard prepared a $5B iShares bid using Warren Buffett debt
“Well, first they went to Omaha, Nebraska and talked to Warren Buffett. Would he be interested in lending some money? And then they explained to him through their banker that they had the ability to raise money by passing it back to the funds anytime they wante…”
Assertion Not checkable as stated
Ellis: Yale removed Lehman Brothers as counterparty years before its collapse
“So sure enough, Lehman was on the list years before the Lehman problem, and years before the Lehman problem, they were taken off the list. And why? Because if you examined it rigorously and carefully, you would realize they're not quite as good at this kind of…”
Insight
Ellis: Increasing manager talent makes markets hyper-efficient, diminishing active outperformance
“The biggest information for people who are interested in the profession and for people who are looking for a good manager is the data documenting the inability of active managers to outperform other brilliantly talented, fully informed, Fabulous equipment, act…”