“Never ask a barber if you need a haircut.” – Warren Buffett
The Mutual Fund Observer by David Snowball is fast becoming one of my favorite investing reads. He packs his monthly update with a ton of information and analysis on mutual funds, investment strategies, portfolio managers and the markets at-large.
In the latest edition Snowball shares the unfortunate investing track record for the soon-to-be defunct mutual fund of MSN Money’s Jim Jubak:
Beginning in 1997, the iconically odd-looking Jim Jubak wrote the wildly-popular “Jubak’s Picks” column for MSN Money. In 2010, he apparently decided that investment management looked awfully easy and so launched his own fund.
Which stunk. Over the three years of its existence, it’s trailed 99% of its peers. And so the Board of Trustees of the Trust has approved a Plan of Liquidation which authorizes the termination, liquidation and dissolution of the Jubak Global Equity Fund (JUBAX). The Fund will be T, L, and D’d on or about May 29, 2014. (It’s my birthday!)
Here’s the picture of futility, with Mr. Jubak on the blue line and mediocrity represented by the orange one:
Yup, $16 million in assets – none of it representing capital gains.
Mr. Jubak joins a long list of pundits, seers, columnists, prognosticators and financial porn journalists who have discovered that a facility for writing about investments is an entirely separate matter from any ability to actually make money.
Snowball then went on to list a handful of other pundits that had trouble finding success managing money after finding success with well-known columns.
I occasionally read Jubak’s pieces at MSN. He seems like a sharp guy with well thought out opinions on the markets. I’ve never seen his message venture into the hysterics you see at times on other large financial websites. But his hypothetical performance numbers he listed were always crazy high. It looked like his ideas were absolutely destroying the market (on paper).
It would appear that running money was easier on paper than it was in the real world.
The point here is not to point a finger at these columnists to show that they can’t run real money. There are plenty of greater writer/investors out there. The point is that you should be skeptical of what investment advice you use and who your sources are. Jubak gives seemingly solid advice in his columns, but it turned out his stock-picking skills didn’t translate so well into the mutual fund industry.
There is a constant barrage of people they throw at you in the financial media, each one a seeming expert in their field. The majority of these people spend their time making endless predictions about stocks, the economy, interest rates, company earnings, etc.
Because these are all intelligent-sounding people, it’s very easy to get sucked into believing every single forecast they put out there. Some will be right some of the time. Most are wrong most of the time.
Not everyone out there making predictions is an evil person. They are only human and no one can predict the future. It boils down to the fact that it’s their job. They are forced to make predictions. Intelligent arguments about the future of the financial markets are wrong all the time.
Part of the problem Is that you have no idea what their actual track record is or the conviction they hold on each recommendation they put out there. The talking heads have no idea what your risk profile and time horizon are. There’s a huge disconnect between financial predictions you read about or see on TV and your personal circumstances.
That’s why it’s so important to focus on a rules-based process instead of short-term outcomes. It moves you away from constantly trying to figure out what’s going to happen next based on expert opinion.