Liquid Millionaire, drying up?

[sigmund1]

As Paul Daniels used to say, You'll Like This, But Not a Lot"

I'm coming to the conclusion that the Sutherland Brother's are the Monte Pythons of the Investment Industry.

I mean, never mind a laff a minute these two joker's are a laff a second, ho, ho, ho.

A quote from their web site...

"Is the market healthy or unhealthy"?

"The way we use to check if the market is behaving as it should is to look at the trading action (price and volume activity) of institutional investors. Why do we do this?. By watching what the big players are doing (buying or selling) each and every day, it can provide essential clues to which way the market is likely to head".

Cor Blimey, that sounds good!

So when did Brother Stephen put this theory to the test?

Answer, 2007.

Result, a WHOPPING FAILURE!

Brother Stephen advised to exit the markets 8 months before the high.

And 20% OFF the yearly high.

Now this is the best bit, he advised to START BUYING again in March 2008, RIGHT in the MIDDLE of CREDIT CRUNCH.

lET'S FACE IT, HOW WRONG CAN YOU BE?

Does this mean the BIG PLAYERS, you watch ever soooo closely are wrong also, sounds like it to me!

Brother Stephen's excuse, "these heavy losses were only temporary"...page 12 How to Make Money in ISA'S.

Stevo, me old mate, for the investor, All Loses Are Temporary.

The market today is higher than 1929, 1974, 1987, 2000, 2007.

Just remind us all again, what do you do besides ask for £3000 pa?

 

[sigmund1]

Why Why Why

Financial industry heavyweights such as Burton Malkiel, Jack Bogle, and Charles Ellis were all providing substantial evidence that the vast majority of professional money managers had underperformed a simple market index.

But this was and still is the strategy that many recommend for their clients even though there is now a mountain of evidence refuting its merits.

WHY do most active managers fail to outperform their benchmark overtime?

WHY didn't the Sutherland Brothers accept Warren Buffet's bet?

WHY is it the Sutherland Brothers still refuse to make public their performance audit?

 

[sigmund1]

The Results Are In.

OK, I know you've all been waiting with baited breath.

The results of ISACO's 3 year performance as advertised on their web site claim it's 9.8%.

Exactly the same time period a simple SP500 PASSIVE TRACKER FUND would have returned around 15%.

A SIMPLE NASDAQ TRACKER FUND would have returned around 21%.

Bloody heck, it looks like those Trackers have given you-two-would-be-if-you could be's, a right spanky bottoms.

In ISACO's 2nd book How to Make Money in ISA's, Brother Stevo makes the statement...

"you'll begin to notice a definite and deliberate emphasis on the US Stock Market"

So Stevo me old Mukka, does that mean you have UNDERPERFORMED the US markets for the last 3 years by around 50% for the SP and 100% plus % for the NAS?

Maybe I should have gone to Spec Savers or something, but that doesn't look to me like out performing.

Our Nan's back from the Cote d'Azur and she say's...

Where's that AUDIT, you pair of LURKERS.

 

[sigmund1]

I'm just the messenger.

Don't take my word for it, just read the financial press, it's full of it!

Empirical evidence CLEARLY PROVES that the worst place any investor can stick their money is with one of those MANAGED FUND MANAGERS.

You know they ones I mean...those gob-shyte people who think they are better than the rest of us and can out perform the markets.

"According to the analysis, 99 per cent of actively managed US equity funds sold in Europe have failed to beat the S&P 500 over the past 10 years.

While only two in every 100 global equity funds have outperformed the S&P Global 1200 since 2006.

Almost 97 per cent of emerging market funds have under performed.

Daniel Ung, director of research at S&P Dow Jones Indices, said: “The figures are startling.”...article from Financial Times.

 

[sigmund1]

Ftse 250 outperforms isaco

It's been a bad week for the ISACO Brothers, first they find out that their performance record has under performed the SP500 in a big way over 18, 7 and 3 years.

On top of that the latest news all over the financial press proves MANAGED FUNDS UNDER PERFORM their relevant benchmarks by a country mile.

Below is an article by Nick Kirrage of Schroders, he points out the return FTSE 250 an investor would have made had they invested right at the top of the market in 2000.

Yes, Brother Stevo, the 250 beat your return of 121% by around 50%.

But Stevo, didn't you write that you follow the big money, the big institutions...WHAT WENT WRONG?

Can it get any worse for you pair chancers...YES IT CAN, stay tuned...ho, ho, ho.

"So what about the FTSE 250 index of mid-sized stocks? Over that same 16-year period, this made 177% on a price return basis"...Nick Kirrage

 

[sigmund1]

Nobel Prize Winner 1.

Health and Safety warning... Brother Stevo and Brother Paulie, SIT DOWN NOW, the following may just buggar up the rest of your misguided life!

Eugene Fama is an American economist, often referred to as "The Father of Finance", best known for his empirical work on portfolio theory, asset pricing and stock market behavior.

His M.B.A. and Ph.D. came from the Booth School of Business at the University of Chicago in economics and finance.

His doctoral supervisors were Nobel prize winner Merton Miller and Harry Roberts, but Benoit Mandelbrot was also an important influence. He has spent all of his teaching career at the University of Chicago.

His Ph.D. thesis, which concluded that short-term stock price movements are unpredictable and approximate a random walk, was published in the January 1965 issue of the Journal of Business, entitled "The Random Walks In Stock Market Prices",[7] which was published in the Financial Analysts Journal in 1965 and Institutional Investor in 1968.

His later work with Kenneth French showed that predictability in expected stock returns can be explained by time-varying discount rates, for example higher average returns during recessions can be explained by a systematic increase in risk aversion which lowers prices and increases average returns.

His article "The Adjustment of Stock Prices to New Information" in the International Economic Review, 1969 was the first event study that sought to analyze how stock prices respond to an event, using price data from the newly available CRSP database. This was the first of literally hundreds of such published studies.

In 2013, he won the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Bloody heck, that sounds impressive, a Nobel Prize Winner.

Good grief he must be one of those super brainy types that make Carol Vauderman look like a doughnut when it comes to mathematics.

Note to Brother Stevo...that’s SUMS to you, cos I remember you only got an F in maths.

So what does Fama say about TIMING ACTIVLY MANAGED FUNDS?

"NEVER...THE GAME OF DOING SOMETHING ACTIVE IS FRAUGHT WITH LOSSES...THERE'S NO EVIDENCE THAT MARKET TIMING WORKS".

 

[sigmund1]

Eugene Fama quotes

The Nobel laureate known as one of the founders of passive investing lets loose on active management.

"Active management is a fallacy, and it’s completely unnecessary."

Passive investing is the only sensible way to go.

“There’s this fallacy that people believe that we need active managers".

“When is active management good?... The answer is ‘never"

“It’s always a zero-sum game".

“In the end, they realize that the game of doing something active is fraught with problems.”

Personally, Fama invests in index market portfolios.

“Active management is another way of saying market timing and there’s no evidence that works.”

Nan say's...what have the Sutherlands got to say about that?

 

[sigmund1]

Nobel Laureate 2. Daniel Kahneman

Awards, Nobel Prize in Economic Sciences.

The average investor's return is significantly lower than market indices due primarily to market timing...Daniel Kahneman.

Question. So investors shouldn't delude themselves about beating the market?

Answer. "They're just not going to do it. It's just not going to happen".

As reported Orange County Register. 2002.

 

[sigmund1]

Nobel Laureate 3. William F Sharpe.

"After costs, the return of the average actively managed dollar will be less than the return on the average passively managed dollar.”

William F. Sharpe, Nobel Laureate in Economics, 1990

 

[sigmund1]

Nobel Laureate 4 Merton Miller.

"Any fund manager who doesn't have the vast majority of their portfolio in passive investments is guilty of malfeasance, nonfeasance or some other kind of bad feasance!" February 1997 - "Investment Gurus," Peter Tanous

"Most people might just as well buy a share of the whole market, which pools all the information, than delude themselves into thinking they know something the market doesn't. " 1974 - http://www.brainyquote.com

 

[sigmund1]

more quotes on timing the markets

The evidence has shown that market timing doesn't yield superior results. With that in mind, here are some quotes on market timing from some of the most astute minds in the industry.

Warren Buffett
"We continue to make more money when snoring than when active."

"The only value of stock forecasters is to make fortune-tellers look good."

"My favorite time frame is forever."

Peter Lynch
"Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves."

"I can't recall ever once having seen the name of a market timer on Forbes' annual list of the richest people in the world. If it were truly possible to predict corrections, you'd think somebody would have made billions by doing it."

Jason Zweig
"Whenever some analyst seems to know what he's talking about, remember that pigs will fly before he'll ever release a full list of his past forecasts, including the bloopers."

Charles Ellis
"'Market timing' is unappealing to long-term investors."

Jonathan Clements
"What to do when the market goes down? Read the opinions of the investment gurus who are quoted in the WSJ. And, as you read, laugh. We all know that the pundits can't predict short-term market movements. Yet there they are, desperately trying to sound intelligent when they really haven't got a clue."

Bernard Baruch
"Only liars manage to always be out during bad times and in during good times."

Mark Rieppe
"Market timing is impossible to perfect."

David L. Babson & Company
"It must be apparent to intelligent investors that if anyone possessed the ability to do so [forecast the immediate trend of stock prices] consistently and accurately he would become a billionaire so quickly he would not find it necessary to sell his stock market guesses to the general public."

Financial Publications
"Let's say it clearly: No one knows where the market is going-experts or novices, soothsayers or astrologers. That's the simple truth." -- *Fortune.

"A decade of results throws cold water on the notion that strategists exhibit any special ability to time the markets." ---* The Wall Street Journal.

 

[sigmund1]

Charles Ellis

Was one of the best kept secrets on Wall St...Aggressive Fund Mangers cannot beat the market.

Charles Ellis credited as being the first industry insider to go public that managed fund managers will underperform the market over the long term.

Did that make Charley a whistle blower!

Wrote the book The Losers Game in 1975...now in it's fifth print.

Noted research proves that money managers DO NOT possess any money making skills...message to Brother Paul and Stephen.

“The investment management business (it should be a profession but is not) is built upon a simple and basic belief: Professional money managers can beat the market. That premise appears to be false.”

Strange how slow the general public have been in learning that message.

As our Nan say's...Fools and Their Money.

 

[sigmund1]

Fading Stars

You might describe Star Manager Bill Miller of Legg-Mason as a fading star.

Brother Paul and Brother Stephen might want to take notes.

Bill Miller earned the reputation for out performing the SP500 INDEX for 15 consecutive years. No one else has ever managed such a feat.

Cue the cheer leaders.

HANG ON, NOT SO FAST.

That was back then and like all managed fund managers Bill's star started to fade until it was no more.

2008 saw the end of Bill's stellar performance, he hung in there for a few more years but unfortunately for Bill his edge was gone.

He'd gone from being the manager that could do no wrong to the guy who could do no right.

Bill and his clients had their 15 minutes in the sun but it's all a dimm faded memory now.

Mathematics and reality had caught up with him...ACTIVE FUND MANAGERS CANNOT BEAT THE INDEX'S FOREVER.

 

[sigmund1]

ISACO v SP500 TRACKER FUNDS.

ISACO 121%.

SP500 INDEX TRACKER FUNDS AROUND 190%.

ISACO's management fees, £3000 per year.

Tracker Fund fee's, around the cost of a fish and double chip take away!

Performance data found on ISACO's web site. Dec 1997 to Dec 2015.

 

[sigmund1]

Can't Find It!

I've looked and I've looked but it isn't there!

That is I've looked at the Brothers 2 books and can't find one word about it.

That's over 500 pages and not one reference, not one word...nothing, nuffing. nada, zilch, zero.

You would think this pair would only be to glad to boast about it, but seems not.

I'm talking about how they timed the run up to the 2000 bull market top and the market down turn into 2003.

But alas not one word...I wonder why?

Could it be that they made a pigs ear of it.

Could it be that their timing was worse than the 2007 market top.

So how about it Brother Stephen and Brother Paul.

Your silence is deafening!

 

[sigmund1]

ISACO vs SP500 Tracker Fund.

The Brothers ISACO claim on their web site that 7 years ending 31 Dec 2015 and following their hot shot fund picking methods...

£250.000 would have increased to £539.000.

Wow, Golly Gee-Whiz.

A typical numb-nut, passive SP500 TRACKER FUND would have increased to £657.000. Same period.

NO WAY...YES WAY.

That's a whopping £118.000 more from the Tracker Fund.

NO WAY, YES, NO-WAY.

It's even less for these poor little people who signed up to the ISACO lunatic mystery tour.

Because...

Management fees for the 7 years is £21,000.

Which means ISACO INVESTORS are £139.000 out of pocket.

And that's just in 7 years.

NO-WAY, YES-WAY, YES, DOUBLE WAY.

 

[sigmund1]

Who's the Daddy?

Like they say on the Jeremy Kyle show, the results are in.

So, Who's the Daddy?

Is it the Brothers ISACO, with their In Out, In Out, Shake It All Around, smarty pants methods.

Or, the Wake Me Up Before You Go-Go PASSIVE INDEX TARCKER method.

The ISACO Brothers tell us on their web site that for the 5 years ending December 2016 they managed to return 8.2%.

But how does this compare with the FTSE100?

Dont take my word for it...take a look at the RUSSELL FTSE web site under Fact Sheet.

FTSE100. 9.1%
FTSE250. 15.4%
FTSE SMALL CAP 16.4%
FTSE ALL SHARE. 10.1%
FTSE FLEDGLING. 19.8%

Good bloody grief...does this mean that the ISACO Brothers have under performed their fav benchmark for the last 5 years?

Looks Like It.

 

[sigmund1]

Folly of Market Timing

So what went wrong?

Looks like the ISACO Super Timing Fund Picking Portfolio has under performed the FTSE100 for the last 5 years.

But could this fatal adventure have been avoided?

According to one such research paper...YES!

A study by University of Utah Professor John Graham and Duke University Professor Campbell Harvey.

The massive 51-page study tracked 15,000 predictions made by 237 market-timing newsletters from June 1980 to December 1992.

By the end of the period, 94.5% of the timing newsletters had gone out of business with an average life span of just four years.

"There is no evidence that newsletters can time the market," the study concluded.

"Consistent with mutual fund studies, 'winners' rarely win again and 'losers' often lose again."

"Sure, it'd be great to get out of stocks at the high and jump back in at the low," observed John Bogle in an interview with Money Magazine.

"In the 55 years I have been in this business, I not only have never met anybody who knew how to do it, I've never met anybody who had met anybody who knew how to do it."

Our Nan say's...you can the Sutherland Brothers to that list as well.

 

[sigmund1]

RESULTS, ISACO v SP500, NASDAQ.

The Isaco brothers Paul and Stephen were full of confidence back in 2007 when they wrote their Book of Funny Sayings...Liquid Millionaire.

Here is one such funny quote...

An investment System Capable of Beating the Nasdaq. page 97.

But since inception how have our Deadly Duo actually performed?

According to information found on the ISACO web site...

Since December 31, 1997 to December 31 2016 have returned for their clients, wait for it, drum roll...149% Total Return.

But for a LOW COST SP500 TRACKER FUND PLUS DIVIDENDS the Total Return was 270%

For a LOW COST NASDAQ TRACKER FUND WITHOUT DIVIDENDS the total return was
290%.

Seems to me the Brothers Stephen and Paul are wealth destroyers not wealth creators.

 

[sigmund1]

ISACO v OTHER TRACKER FUNDS

Recap...ISACO total return since inception 149%.

But for exactly the same period...

US SMALL COMPANY INDEX FUND...445%

INTERNATIONAL VALUE FUND... 215%

EMERGING MARKTS INDEX FUND... 315%

EMERGING MARKETS SMALL CAP INDEX FUND... 630%

Just like those before and those that will follow, the ISACO Brothers have fallen flat on their faces when it comes to fund picking.