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Subject:  Why did GG fail? Date:  5/1/2012  8:56 PM
Author:  anuragupta Number:  4853 of 5166

Introspection helps us all become better investors. I hope TMF is willing to be candid here.

The primary reason has to be unsustainable number of subscribers. Nathan has already acknowledged my unsurpassed ability to create strawmen. So let me do my job here. My estimate is GG needed at least 1500 subscribers to stay afloat ($450K pays salary and benefits for 2-3 advisors and support staff). It didn't feel that way considering the active posters on the boards were barely a dozen - I understand that there is much larger number of customers not on the boards.

Now why did GG lose subscribers? 2 primary reasons:
a) lack of access to >90% international stocks out there. So hard to pick the potential winners.
b) too deep of a value focus based on numbers alone. Risk was baked in only as a margin of safety (usually ~20%) and that is not enough. David and Tom Gardner have shown how a lot of dangerous risk can be eliminated by focusing only on quality managements (tenure, reputation and performance). GG latched on to this only recently.
c) Poor performance of international markets in general for so long.

Could GG have done anything different?
This is where I struggle. They tried to do everything right - visit the companies, include variety, include domestic firms with foreign operations etc. I enjoyed the wild cards, options plays, etfs etc. I understand that analyzing ETFs, funds, currencies is far more complicated and needs a lot more resources.

I won't blame GG for having the misfortune of an encounter with Bill Mann (who started GG) or failed Chinese small caps. I don't think GG had a fair chance. Just got stuck in the wrong vortex of time.

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