Evaluating Managed Funds

[buffett]

Because of quotes like these...

"The reality distortion field emanating from this fund has old-school Soviet Bloc Ministers of Propoganda green with envy."
"To blame the 4th quarter rally on anything other than Wall Street bonus hunting is pollyanna....The Santa Clause rally is about bonuses and denying it is to deny water is wet."
"SuperInvestor Frontal Lobotomy...SuperInvestor babble?"

....I hope that this will be my last post in response to rock.

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Your IJR vs. SPY chart goes back all of 5 years. How about looking up the CAGR of the Russell 2000 vs. the S&P 500 for something more like 20 or 50 or more years and then getting back to us with your results?

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Maybe you could

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While not exactly what I was originally asking for, here is something (specifically, table 2 on page 16) that seems to be saying that small caps added about 1.2-1.3% annual outperformance for the years 63-99. Perhaps this answers Ed's question about small cap outperformance in regard to your claim that it might be much higher than 1-2% over the long-term.

Here's a site that says the CAGR for the S&P 500 and Rusell 2000 from 7/89-2/00 was, respectively, 17.55% and 14.12%, which is a 10.5 year period of greater than 3% underperformance by small stocks.

(Btw, I have nothing against small company stocks in general. I think they're awesome and should definitely be part of a a sensible portfolio. I'm just (1) trying to get the facts right, and (2) sounding a cautionary note after 6 consecutive years of outperformance by the R2K.)

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How do you reconcile them and other academics with all your SuperInvestor babble?

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1. Mr. Buffett explains it best in the 1984 speech in question. I don't know why it's "babble," though...is it because there are no Greek symbols in the speech?
2. OID is the periodical of choice for Graham-and-Doddsville. A great majority of the interviewees have beaten the market over many-year periods.
3. As Mr. Buffett has wryly observed, EMT is something that (paraphrasing) "works well in theory but not in practice."

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My point was that everyone is blithering on and on about FAIRX, and it hasn't even outperformed the mid-cap value index

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Right. So far. And you're free to extrapolate that out into eternity, and I'm free to believe that FAIRX will eventually win.

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To blame the 4th quarter rally on anything other than Wall Street bonus hunting is pollyanna.

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Your Bill Cara (I have no idea who this is) quote seems to contradict you: "Wall Street profit bonuses to staff will aggregate $24 billion this year. They say it’s because they have done such a wonderful job for you. Actually, the Dow 30 Industrials Average is lower today than its close Dec-31-04 (10,783). The average mutual fund and the average hedge fund has done squat for 2005 as the year comes to a close." You can believe what you want, but I think stories like this are more logical.

I wish you all the best in the market and on this forum, but I just don't see the point in two such differently-minded and stubborn people to keep going back and forth. My main reason in responding so far has not been to try to convert/proselytize you, but to stump on behalf of Graham-and-Doddsville for those who may be reading.

Frankly, though, G-a-D-style investing works best when more people believe EMT (prompting several OID people to contemplate endowing EMT Chairs at b-schools around the country), so I'm not sure why I'm bothering. It'd be a little like figuring out how to beat small stakes hold-em, and then doing something really dumb like going and writing a book about it, so now the whole world knows, and there were 3 2+2ers on my table last night, thanks to Ed "Loudmouth" Miller. [img]/images/graemlins/smile.gif[/img]