Sunday, July 15, 2007
Hussman on wealth building
John Hussman runs two mutual funds. I have some money invested in each of them. He also writes wonderful essays on the markets and investing. This link is to one of his best articles.
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5 comments:
Have you looked at the TFS Market Neutral Fund? Its ticker is TFSMX. Any thoughts would be appreciated.
I am unfamiliar with TFSMX fund though a quick google look shows me it has done ok in this market. Usually I am suspicious of funds as a default position. Too many fund managers are closet indexers more concerned with career risk than portfolio performance. A market neutral fund should at least avoid some of that trap.
In general I want an ETF or a specific manage whose methodology I understand and trust. Examples would be Tweedy Brown, Mason Hawkins, and Hussman.
I think a healthy fear of most mutual funds is a good thing.
Do you pay attention to Sharpe ratio? If so, what do you think about TFSMX's? And, do you think that closet indexers could produce a Sharpe that was any different than an index?
Sharpe ratio of a fund over such a short history would not sway me very much. Plus Sharpe ratio treats all volatility as undesirable but, upside volatility is a good thing. Nelson Freeburg of Formula Research has had some very good articles on sharpe and other ratios for risk assessment. I heartily recommend his service.
Sortino ratio does not penalize for upside volatility. I like that, too.
Regardless, could a Sharpe ratio (or other metric like that) over a period of time greater than 2 1/2 years help one determine whether a fund manager was a closet indexer? If so, do you think that TFSMX is a closet indexer?
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