–I happened to glance at the letters to the editor section of today’s Financial Times. One was from someone I don’t know but who seems to be connected to the equity money management business. The thrust of his letter was that the average investor in the Fidelity Magellan fund in its glory days of the 1970s only achieved a fraction of the market-beating returns delivered by star manager Peter Lynch. How so? The writer’s explanation is that most retail investors get in at the top and leave at the bottom–they are swayed, that is, by short-term impulses and end up much worse off for doing so.
My experience is that, provided the portfolio management structure is solid, this is typically what happens. Then I started thinking about the ARK funds. The first part is certainly true in here case. And there seem to have been very large redemptions this year. I think the key variable in whether to look once more at her part of the stock market is the degree to which her success was driven by interest rates declining to near zero. If so, how likely is that situation to recur?
That isn’t everything, though. Fidelity Magellan had its 1970s success in substantial part to not owning the large-cap Nifty Fifty, which spent the latter half of that decade–and beyond–deflating from the speculative bubble they were in prior to the big 1973 recession.
–an article on the facing page suggests Netanyahu is stalling negotiations for the return of Israeli hostages in Gaza in the hope that the lack of a deal will boost Trump’s chances of being reelected, and presumably that Trump will help him overcome his domestic legal difficulties. Hard to believe.
–for what it’s worth, I see Joe Biden as a gentle man from my father’s era, the 1950s, whose mental powers have faded in serious fashion during his time in office. The Donald Trump from last night (the same guy who bet the farm on the curious idea that vacationers would go to the NJ shore in February and who suggested that drinking bleach would cure covid–so never Einstein) seemed scarily unhinged. Not someone to have the nuclear codes.