20-20 Investing

NOW They Tell Us

Getting caught up on the various financial publications I try to at least skim regularly (The Wall Street Journal, Barron's, Investor's Business Daily, etc.), I've been struck by how many money managers claim they were nervous about the market this Spring, and re-positioned their funds to raise cash (and sell equities).

With the broad averages down 15% since then, they (and their investors) are sitting pretty.

Funny, I don't remember any of these sages saying that back then.

If anything, the consensus on the same financial pages two months ago was that the recovery was gaining traction -- which meant that earnings were sure to go up, and therefore stocks were cheap.

I remember reading once that the definition of a politician is someone who looks for a parade and then runs to the front of it.

A good number of money managers subscribe to the equivalent: name the latest trend, and announce that they anticipated it.

P.S.: So did they? It can be very hard to tell.

For one thing, money managers can be bullish one day and do an about-face the next (can you say "Barton Biggs?").

For another, many funds engage in what's called quarter-end window dressing: whichever stocks or market sectors have been the most successful the preceding quarter, is what they buy for their fund . . . the last day (or hour) of the quarter!

Does Everybody Manage Gazillions?

The Billion Dollar Money Manager Club

Oh lord won't you buy me a Mercedes Benz
My friends all drive Porsche's, I must make amends.

--Janis Joplin

I must have just finished reading the 10th -- or 100th -- financial piece peppered with platitudes from investment managers who, very matter-of-factly, cumulatively seem to run more money than exists on the planet.

Who are these people?

How did they get such big chunks of capital to manage . . . and where are they from again??

The following quotes are straight out of a recent Bloomberg.com article discussing oil stocks; the only information that I've altered are the individuals' names and the amount their funds oversee (I've embellished slightly):

“You have the uncertainty about where oil prices are headed,” said John Smith, chief investment officer at Fort Washington Investment Advisors in Cincinnati, which oversees more than $450 million trillion. “It’s a very uneven recovery."

"As the global economy improves, demand for oil should increase,” said Bob Johnson, who helps oversee $500 gazillion as research director of Dallas-based Hodges Capital Management Inc.

“Obviously we’ve had some setbacks in the past couple of weeks with the sovereign debt crisis in Europe and oil spills,” said Steve Anderson, Boston-based money-manager at Pioneer Investment Management, which oversees about $350 quadrillion zillion.

See what I mean??