Evaluating Managed Funds

[Ed Miller]

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My point was that small/value tilt in portfolio can explain a lot more than the 1-2% cited.

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My question was by how many percentage points.

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Well if you look at the link to the chart you'll see it's double digits.

This SuperInvestor stuff is such non-sense. Warren Buffet is an investor. The rest of us just trade shares of companies. Big difference.

If you are rhetorically asking me to pull out my crystal ball, then all I can direct you to is Fama and French.

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I'm not asking for crystal balls. But I am asking for more than a link to a chart of two indexes pitted against each other for a few years. To me, that's the equivalent of someone showing me graphs over 10k hands of two different poker players and drawing conclusions about who is better (and about specific winrates thereof) from just those graphs.

And if merely tilting your portfolio toward small/value stocks could produce DOUBLE DIGIT improvements over the S&P, why would anyone ever put their money in the big guys?

I have "Random Walk" by Malkiel on my reading list, and I suppose I'll look into Fama and French too.

Without having read the stuff about EMT, though, I am strongly skeptical of its practical application . It seems difficult for me to understand how the happenings of 1998-2002 can be explained by EMT. Or, for that matter, how stocks can go up and down so wildly, day to day, on zero news about that company. Or on news that is functionally irrelevant. This isn't, to me, how an "efficient" market would behave.

And look at how easily penny stock prices (or bigger stocks like WPTE) can be manipulated. How can the market possibly be "efficient" when one person, or a small group of people, can waltz in and predictably alter the price of the stock significantly one way or the other?