Saul,
Someone (or a couple of people) tried to browbeat her and intimidate her
That did not happen. I know the thread you mean. I realize the Internet is a weak medium for communication, but I’m still surprised you could manage to draw such inaccurate conclusions. Feel free to quote anything I might have said that you might have misconstrued-- but you should really do it on the Pro boards, if you took issue with what was said.
What did happen was that Karen posted that people on Saul’s Investing Discussions were “bananas” about SWKS. I wondered what she meant by that and I asked some questions to clarify. I also asked some questions about how an investor might go about resolving differences of opinion from multiple sources of advice. These are general questions that any successful investor needs to ask themselves as they go through life. The question is a general one, really-- how do you decide who to listen to? What criteria do you use to establish credibility? It was a suggestion to do a little soul searching, not a brow beating. I honestly don’t care what conclusions Karen or anyone else comes to-- everyone’s answer is bound to be different and personal. The important thing is the process of considering it. Selfishly, asking her those questions was also a way for me to learn more about your board via Karen without having to do a lot of work on my own.
Karen did not really answer my questions; if she had, I would have suggested that, given opinion X from one expert and opinion Y from another, I would want to understand the scenarios in which those two opinions made sense. Clearly if the experts have different opinions, they have a different set of assumptions. I would want to know more about what those assumptions are so that I could decide for myself which is more reasonable.
I would finally add that I have no idea whether Pro is right about SKWS, or you are right, or GauchoChris is right. All of you have probably studied the company more deeply than I have. I do know that after about six years with Pro, they have earned my trust and respect as analysts and advisors. I don’t have any history with this board, so my default assumption is-- and must be-- that it is just another source of information among many, with no particular reason for me to favor or discount it as an input. It has not yet earned any place in my decision-making framework. My questions to Karen were posed in a way that would hopefully have Karen deciding for herself what good criteria might be. For herself. I can’t tell her anymore than you or anyone else can. That is something that comes from within and from experience and from asking lots of questions.
While I’m here, I guess I should respond to the many inaccurate comments you made about the Pro service itself… someone needs to do it, and I don’t see anyone else stepping up…
MF Pro is only beating the S&P by 34.7% after almost seven years!!! That’s practically nothing
Your numbers are off-- Pro is up 151%, while the S&P 500 total return is up 131%. I’m guessing you are using the simple return for S&P without accounting for dividends. The comparison between Pro and S&P 500 total return is reported on fool.com in the lower left, and also on the Recommendations page of the Pro portfolio. But let’s assume you were right, because I want to respond to your conclusion. ~35% in 7 years works out to more than 4% of alpha over the broad market. Most money managers would be happy with that performance, especially in an absolute returns service like Pro, and even more so given that Pro is handicapped by the 24-hour trading restriction after its trade recommendations go out before it can act itself.
That sounds good until you realize that inception was just about at the bottom of the 2008 crash. The S&P closed on that day at 996.23, and closed yesterday at 2105.33.
S&P 500 bottomed at 666. Over that time period Pro was lightly invested and was very stable. It’s hard to put a value on the peace of mind a Pro investor had during that time relative to a broad market index investor. From a psychological point of view, the early Pro investor was much better equipped to take advantage of the coming bull market after the crash, meaning the difference between real returns and theoretical returns.
if you figured in the MF Pro fees for seven years it would even be considerably less.
Pro charges a fixed subscription fee to its members, so it depends how much you have invested, and whether you assign any value to the social and educational aspects of the service. In a poll I took last year, I found that Pro members have around $500K invested with the Pro service on average, so their membership fees equate to maybe two tenths of a single percentage point of their assets dedicated to Pro. Many of us do assign real value to the social aspects of the service as well. Mentally, I consider my “Pro management fee” to be maybe half of my subscription fee, but even if I did consider the entire fee to be chargeable to my returns, it would be a bargain.
It’s interesting that you characterize a .2% management fee as “considerable” while saying the 4% outperformance of Pro is “practically nothing”. Maybe I’m missing something here, but it sounds like you are implying that .2% is a larger number than 4%. That can’t be what you mean, of course, but I have no other explanation for it. Help me out here.
I would also note that Pro has a published goal of achieving “North Star” returns of 7% + inflation over rolling 3 year periods. I imagine you have a different set of goals, and that comparing your performance to Pro’s is therefore a bit illogical. Pro is not out to compete with you, any more than Pro is out to compete with bonds, real estate, commodities, or even the S&P 500 itself. Beating S&P is not a goal-- the North Star is the goal.
(They don’t give a comparison with the S&P the way the other MF newsletters do).
As noted above, sure they do. See fool.com or the Pro recommendations page. But while we’re at it, it’s also worth recognizing that Pro reports true returns (e.g. starting capital of $1 million at present value of $2.5 million = 150% return) while many of the services e.g. Stock Advisor are reporting averages of all their recommendations. Like other points you made, this is an apples and oranges sort of thing… comparing the numbers directly has questionable value since they are measuring different things.
Rob
