I reviewed all of their proprietary funds with data over a 1 year, 3 year, 5 year, 10 year and 15 year period. The percentage of these funds (in the aggregate) which failedto beat the returns of their Morningstar assigned benchmark ranged from a low of 67.57% to a high of 75.57%. Over the longest period measured (15 years), 66.05% of the 324 proprietary funds of these firms failed to outperform their benchmark.This is legitimate news, but you would not have heard about it from the financial media covering this event.
The pursuit of “alpha” has decimated the returns of millions of investors and enriched the securities industry, which claims an expertise that does not exist. By glorifying this elusive goal, the financial media perpetuates this myth, causing incalculable harm to investors.
As an alternative to “seeking alpha”, next year let’s have our own conference. We’ll call it: “Capture Market Returns and Secure Your Financial Future.” My wish list of speakers includes Eugene F. Fama, Kenneth R. French, Robert C. Merton, John Bogle, Roger G. Ibbotson, William F. Sharpe and Myron Scholes. These distinguished Professors of Finance, Nobel Laureates and authors can support their views with solid, peer reviewed data. It would be a refreshing contrast to the massive hypocrisy of the “Seeking Alpha” conference.
The Wall Street bullies have a vested interest in keeping you trading stocks. We are looking to get rich over night, while the best way is to get rich slowly.
Please comment or call to discuss how this affects you and your long term financial goals.