This just in: Investors demand performance!
This headline has been crashing the tape over the last few weeks as investor after investor seems to be complaining that they want their money managers to deliver actual good results, to stop just charging fees and to start delivering returns. I am shocked, shocked I say, to learn that investors are actually seeking a return on their investment. I mean, really, what nerve!
The truth is, ladies and gentlemen, investors should seek a return on their investment and if the manager does not deliver — well, in the words of Mr. Trump: Mr. Manager, you’re fired. I mean, this is pretty basic isn’t? Think about it: You give a manager — hedge fund, private equity, mutual fund or other — a pool of capital, you agree on investment strategy, you agree on a fee and in return you expect the investment to provide a return.
It is actually quite simple, yet the press — and perhaps members of Congress — fail to understand this. They both moan and groan that the fees are too high, the performance is too poor and the managers are too lazy. Well, in some instances they may be correct. Nevertheless, they also seem to think that, well, managers should work for free and, well, the returns should just come out the ether.
Investors have the ultimate say: They can redeem when performance does not add up. That is what makes this business truly democratic. The idea that a lower fee structure is going to make things better is misguided, misconstrued and demonstrates a clear misunderstanding of the investment management business.
Managing money is difficult job. Period. End of story. To think any different is, quite frankly, absurd. Remember how when people are making money nobody complains and it’s only when things get rough that people do complain. The reality is the market moves, people can’t always perform well and as a result there will be periods of profits and, alas, periods of losses.
Investors need to focus on the long term to truly see the level of value a manager is adding to a portfolio. To do anything else is simply foolish.
Things that drive me crazy
People are out of their minds. Recently, I was at kiosk getting my iPad repaired, I dropped it, the screen cracked and, well, need I say more? Anyway, as I waited for the tech, I witnessed all that is wrong with society. The customer in front of me was unhappy with his purchase – he seems to have also had a problem with a screen or something and when the tech told him that the only thing he could do was to replace the screen for a fee, the customer went nuts. He started screaming vulgar things at the tech, he smashed the counter, pushed over the display – I mean really went nuts – screaming and yelling like the nut ball that he is before storming away in a huff. It was shocking to see and frankly a bit scary. It’s just a phone. The actions of this customer demonstrate the lack of civility and respect that people have for one and other. It is disgusting, deplorable and despicable and it needs to change.