The Tapeworm Hungers!

The following chart shows portfolio management revenue divided by corporate dividends. Keep in mind that portfolio management isn't just about dividend management, but I think the chart offers a fairly good parasite indication.


Click to enlarge.

That's one exponential trend failure I won't lose any sleep over. Hurray! Miracles really do happen!

As the bull market goes on, people who take great risks achieve great rewards, seemingly without punishment. It's like crime without punishment or sex without sin. - Ron Chernow

In a bull market, gotta pay the tapeworm to enhance the return that you could achieve yourself! You need professional expert portfolio management!

In a bear market, gotta keep paying the tapeworm to lose less money than you could lose yourself! You need professional expert portfolio management!

That's what I'm told. The only difference is that professionals just don't use the word tapeworm. "Value added portfolio manager" sounds better.

Over the long-term, how's that plan working out? Seriously.

Manager Value Added

MVA is a powerful concept that defines the extent of value added by active portfolio management. It's about how much value you are getting in return for the fees you pay to your fund manager. Managers with high MVA add value and can beat the index.

Managers with high MVA add added value and can did beat the index. Past performance is no guarantee of future results.

Why pay the high fees if you can get better returns with an index fund?

Great question.

For the less sohisticated investor, there is nothing wrong with this line of thinking which, as a matter of fact, is adopted by traditional mutual fund software and web sites.

Sohisticated is not a word. They would have known this if they would have used one of the many free value added online spell checkers.

Performance tables compare fund results to index returns, leading investors to conclude, in the majority of cases, that fund managers cannot beat the index.

Yeah, that's pretty much what I conclude.

The problem with that method is that it does not compare apples to apples. It's like saying: my apple tastes better than your orange. Fine, if that makes you happy, but I still like oranges more than apples.

The orange has bite marks and much of the juice is missing. Just sayin'.

Source Data:
St. Louis Fed: Custom Chart