Introduction


Manager Pickers

Men In Black II, Ocean’s Twelve, & The Hangover, Part II... all of these movies have one thing in common: they all were abysmal sequels to blockbuster movies. We long to regenerate scenarios when everything comes together perfectly and the stars align, but that kind of success is rarely duplicated. In the world of money managers, success means blockbuster performance… every year! Fund managers who are successful in the short term are considered the current financial heroes, despite the fact that every reputable study of mutual fund performance over the past 30 years has found there is no reliable way to know if managers with recent winning performance will win in the future. This is why some variation of the disclaimer "past performance is no guarantee of future results" must appear in all mutual fund advertisements and prospectuses. Even still, unwitting investors chase recent performance, and the dangerous practice of manager picking ensues.

Sometimes managers can duplicate their success a few years in a row, but it just doesn’t last. As hard as it is to duplicate success in the film world, it is even more difficult for these all-star money managers to duplicate their past success.

Step 5IntroductionManager Picking