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Author: nphrn Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 89118  
Subject: Devils advocate on portfolio closures Date: 2/18/2003 7:28 PM
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I've been on this site since reading Tom and David's first book in the late 90's. To me, these real money portfolios have always been at the center of what I've considered special about The Motley Fools; the accoutability and openness, the bravado, the downright cockiness. In the early years, even as the portfolio graphs soared like eagles over the rest of the S+P the brashness was tastfully toaned down. There was little or no gloating. Even as those same portfolios plumetted faster than the S+P these last two years, I remained (still remain) appreciative that you guys continued to let it hang out there in the open.
Now, the portfolios are closing because you want to let your staff stretch out a little? I just don't see what one thing has to do with the other. Why can't the portfolios stay open while the TMF's write about whatever other stocks they want? And... I'm sorry but I have to ask... is the meeting of the portfolio curves with that of the S+P causing some discomfort over there? I can't help but wonder whether you guys are bailing out now because you're nervous that these performances will get worse. I'm also wondering whether there was any behind-the-scenes disagreement on some of the unfortunate picks that made Tom and David reluctant to hang their names and reps on portfolios they no longer completely control.
Just the work of a paranoid (and slightly disappointed) mind.
Regards
Nphrn
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Author: TMFOtter Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48278 of 89118
Subject: Re: Devils advocate on portfolio closures Date: 2/18/2003 10:01 PM
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Dear Nphrn-

Would you like to buy a vowel?

Thank you for your post, and we're happy that you've found so much value from the portfolios. I think that they've been incredible tools. Ones whose times have passed.

You ask a few questions. They basically focus on this: "It's the performance, right?" The answer is no, it's not. We spent a tremendous effort in the past year revamping the Rule Maker portfolio, someting that we absolutely, positively would not have bothered to do if it was "just about the performance".

As for why the portfolios cannot just run in the background -- we've tried that in the past after Dale Wettlaufer left in 1999 with the Boring Portfolio. It was a failure. The time it takes to track the companies in the existing portfolio are substantial. Tom and David Gardner don't have time to do it, I don't have time to do it, and neither do the other portfolio managers. Were this our only job that would be a poor excuse. It isn't. So we have a choice -- do a lousy job managing these portfolios, or don't do it at all. You must excuse us for not viewing the first choice as tenable. And no, Tom & David haven't had a problem with the management of the ports. If there were actually a problem with the management of the ports you'd see, ahem, a change of managers, not a shutdown of the ports. They were not the originators of the decision to do so.

For a substantial amount of time we've struggled with what to do with the portfolios -- though this decision is obviously new the discussion that preceded it is more than 3 years old. The amount of work required of each writer is at times overwhelming -- and the first thing to suffer has been management of the portfolios. That's just reality, and that's not acceptable.

I think that you're assuming that we are somehow going to stop talking about stocks, selecting stocks, or tracking our own performances. This you should not assume. But if there were any friction in the portfolios it was that each manager looked at the composition and said "Wow, there is no way in HELL that my REAL portfolio would only contain these kinds of companies." This was yet another intractable problem for which we never found a solution that fit in with our business.

So we've made this decision, and you're rightfully regretting the loss of the Fool you knew. We're changing how we do things, but we are not changing what the Fool does. And the strategies are in no way going away.

Foolish best-
Bill Mann

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Author: nphrn Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48285 of 89118
Subject: Re: Devils advocate on portfolio closures Date: 2/18/2003 11:39 PM
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Fair enough Ottr , I mean Otter, and thanks for the response. I actually don't have a huge problem with dispensing with the specific portfolios (rulebreaker/maker etc.) You could create a "Select" portfolio or a "Bill mann" portfolio or anything else you want. But if you don't continue with the practice of graphing the collection of stocks somehow against a comparable index fund then there is NO WAY that the accountability will be anywhere near the same. Every one of those pathetic mutual funds that lose to the indexes 9 out of 10 times has to endure that same comparison in Morningstar over 1, 5 and 10 years. If you dispense with the comparative graphs you will go from being much more accountable to much less accountable than those same funds. And as admirable as it might be to say "We really goofed" on this or that pick, THAT kind of honesty does not compare to the simple graph that compares your resusults over time to that of the S+P or Nasdaq etc. Everything is laid bare on that simple line and if the diamond tie-pins have to do it, you guys should too.
Finally, please note that just because the results need to be tabulated does not mean that "real money" needs to be put in. Where you have a website that attracts millions, I'm not sure that $30,000 here or there constitutes "real money" anyway. But if you're doing the MF select and you think Nflx is a great stock why not commit 30 "chips" to it on a given date. If you like Isis, but not quite as much, give it 10 chips. Anyway you want as long as it can be tracked and you guys can avoid looking for too much of a comfort zone.
Regards
Andy


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Author: karpicdm Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48291 of 89118
Subject: Re: Devils advocate on portfolio closures Date: 2/19/2003 7:49 AM
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While I have not been following the Fool as long as Nphrn, I concur with him that losing the portfolios is very disappointing as they were a relatively easy way to measure the performance of the people that we trust to teach us how to use available information to make the best possible investments. It is important to continue to measure your performance, so at the least I would expect columns from time to time that measures performance of various ideas over time (and not just for a month or two, since most of us are in it for the long term).

Regards,

Karpicdm (there is one vowel in there!)

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Author: TMFTom9 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 48298 of 89118
Subject: Re: Devils advocate on portfolio closures Date: 2/19/2003 10:43 AM
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Hey Karpicdm (I count two vowels ;-)),

You bet we will be tracking and measuring performance of various ideas over time! Just one example is that both Matt R. and I did a series of turn of the year columns looking at our personal portfolio management for the year, trades, rationales, etc.

We will not each be treating our own portfolios as model portfolios like the RM, RB and Drip, but we will be making real money decisions and sharing them from time to time. As we have been doing since the days we started work as full time Fools.

Best,
Tom9

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