Some Things You Will Never (Rarely) Hear From a Portfolio Manager

“Wall Street people learn nothing and forget everything.” – Benjamin Graham

Portfolio managers have to be careful what they say in the press, through marketing materials and with clients. This is because, whether they admit it or not, they are first and foremost in the sales and marketing business (not that there’s anything wrong with that – they have to get clients somehow). With that in mind, here are some things you will likely never hear from a portfolio manager:

Our fee is actually a little high.

Now is not a good time to invest in our strategy.

We got lucky.

Any edge we claim to have is razor thin in an ultra-competitive market.

Our strategy is not that unique and is employed by hundreds of other funds.

Our back-tested results are full of all sorts of biases and data-mining.

Yes, we are gathering assets.

I’m extremely overpaid.

We’re closet indexers to the core.

I have no idea where interest rates are heading.

I’ve been in fake-it-til-I-make-it mode for a few years.

My predictions are worthless.

I’m shutting my fund down because our performance has been terrible and I plan on opening a new fund to start over with a brand new track record.

My quarterly letters are 2-3 pages too long.

Going to an Ivy League school doesn’t automatically make me a better investor.

I’ve been coasting off the performance numbers early in my fund when it was much smaller and had fewer investors and assets.

Risk-adjusted performance numbers aren’t all that helpful.

We have no idea where the market is going this year.

My models aren’t all that helpful but they make our fund appear smart.

You’re right, our price targets are not an exact science.

We underperformed this year and it had nothing to do with the Fed.

We’re not going to make any changes in the fund for a while.

We really have no expertise in understanding the macro, big picture stuff, but it really makes us sound smart to our clients.

We underperformed because it’s difficult to beat the market after costs.

We could be wrong.

Our strategy will be out of favor for a while.

Our fund is getting too big.

We made a mistake.

I don’t know.