Tag: Cullen-Roche

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Sorry, but Your ESG Funds Probably Suck by Cullen Roche

“I’ve previously discussed ESG investing and how investing in what you view as subjective morality is actually nothing more than old school stock picking. I get it – we want to do what’s right and make money. That’s all well and good, but as it pertains to secondary markets and stock picking this is mostly a fools errand and the investment management industry is taking advantage of this timely topic to sell what is nothing more than high fee active management sold as a do-gooder strategy that has its cake and eats it too. No. Just no.”

Read the full article at Pragmatic Capitalism right here: https://www.pragcap.com/sorry-but-your-esg-funds-probably-suck/

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My View On: ESG Investing – by Cullen Roche

“I write this post with some hesitancy because I suspect that it is going to annoy lots of people. This annoys me because the goal of this post is to emphasize the importance of being objective and emotionally agnostic when we’re investing. I’ll put on my flame retardant suit and see how well I can communicate this view without enraging people. Wish me luck.

ESG investing (environmental, social and corporate governance) is a hot new space in the investment product landscape. The basic goal of ESG investing is to construct index funds and portfolios that are more morally acceptable. So, for instance, you might think that Exxon Mobil (XOM) is hurting the environment so you construct a portfolio that doesn’t own that stock. Makes sense. Or does it? Let’s explore.”

Read on at Pragmatic Capitalism right here: https://www.pragcap.com/my-view-on-esg-investing/

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10 Years and 10 Lessons from the Financial Crisis

10 years. It feels like yesterday. Then again, sometimes when I look at the economic data it feels like it never even happened. Whether you feel like the crisis is a distant memory or still lingering I think we can all agree that these kinds of big events serve as important lessons for understanding how we will navigate the future. So, 10 years later, here are 10 big lessons I take away from the financial crisis:

  1. Fear wins in the short-term and loses in the long-term. This is probably the number one lesson from the crisis. Human beings have been making tremendous progress for thousands of years. The financial markets are largely a function of irrational short-term beliefs inside of a one way upward trend of progress. So while there will be plenty of times to be scared the high probability bet is that optimism will generally beat pessimism.

Read the full article at Pragmatic Capitalism right here:   https://www.pragcap.com/10-years-10-lessons-financial-crisis/

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Why “Buy Low and Sell High” is so Difficult to Implement

By Cullen Roche at ORCAM Group

Warren Buffett once said: “investing is simple, but not easy”. Given his love of cheeseburgers and Diet Coke and also being 87 years old, he might not agree with this analogy, but I’ve compared investing to getting healthy. Being healthy is simple, but not easy. That is, we all know that you eat right and workout. That’s simple. But it’s really hard to avoid cheeseburgers while also maintaining a strict workout schedule.

Read on: Why “Buy Low and Sell High” is so Difficult to Implement

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Why are Money Managers Paid so Much?

Why are Money Managers Paid so Much?
Cullen Roche – 03/20/2018
“I really liked this article by Noah Smith at Bloomberg about why money managers get paid so much. The conclusion was basically: we don’t fully know why asset managers get paid so much and whether they get paid too much. I’ve spent A LOT of time thinking about this so I figured I might be able to shed some light on the issue.

My opinion is that asset managers generally get paid way too much. For instance, the average investment advisory fee is still close to 1%.¹ And the average equity mutual fund’s asset weighted expense ratio is 0.63% while the average index equity mutual fund costs 0.09%.² In other words, if you work with an investment advisor who uses active equity mutual funds you are paying about 1.6% per year and about 1.09% if the advisor uses index funds. For an investor with $1,000,000 this is the equivalent of dropping off a suitcase at your advisor’s office filled with $16,000 or $10,900 every single year. That’s an ungodly amount of money to pay someone just for managing your assets and it can have a devastating impact on your total returns. I doubt you pay your accountant, doctor, personal trainer or anyone else that much money in annual fees. So how do asset managers pull this off?”

Continue reading at Pragmatic Capitalism right here: Why are Money Managers Paid so Much?