Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev | Next
Author: VUCommodore Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 212899  
Subject: Re: Mr. Market & The Floor Date: 12/13/2012 11:26 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
"Though I appreciate that, in my experience as a money manager few investors prefer to buy shares at ~$134000 rather than ~$130000 the same day."

Surely you are correct, but I doubt Mr. Buffet informed Mr. Tilson of the impending increase in price before he informed anybody else.

Before the buyback, without hindsight, Tilson's IV estimate realized over 5 years would have given him something like a 15% annual return expectation with some estimate of 3-month or 6-month or 12-month downside risk. After the buyback, without hindsight, his IV estimate would give him something like a 14% annual return (~92% of prior return estimate). The downside deviation was clearly reduced by more than 8% of its prior value. So I think it is a very reasonable decision to increase purchase activity on behalf of your clients in that scenario, if 3/6/12 month downside risk is important to them as it nearly universally is.

"The major change was an increased price and a firmer short term downside.
It appears to me that the major beneficiary from increasing allocation
after that, because of that, is the manager rather than the client."

But why does it benefit the manager at all? Asset retention, right? Asset retention is just another way to say that you didn't do something to make your client fire you. So is pursuit of asset retention all that different from pursuit of clients' objectives? The alignment is even more clear if you believe (as I'm sure Tilson does) that your management can generate more alpha than the competitors who would stand to absorb your clients' allocations.

But I'll let that be my last word on the issue, as I understand and respect your perspective as well. You can close the topic with your thoughts if you'd like.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement