Mary Holm... Utter Garbage!

[born2invest]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10907447

I can't believe her advice that it was "luck"

This whole efficient market theory and index fund investing is not going to help anyone looking to learn about the sharemarket and investing. No wonder everyone sticks their money into low yielding property with debt up to their eyeballs.

This kind of advice really ticks me off :mad ;:

[blackcap]

I think Mary Holm is stuck in the 90's theory of the EMH and CAPM. Times and theories have moved on and the assumptions implicit in the CAPM and EMH are not so set in concrete as they once were.

[CJ]

I think Mary Holm is stuck in the 90's theory of the EMH and CAPM. Times and theories have moved on and the assumptions implicit in the CAPM and EMH are not so set in concrete as they once were.She is appealing to the masses. One good thing about her is that she says you dont need an investment manager because 3/4 of them will do worse than the index.

To the guy that bought HSBC because his uncle worked their, he is lucky his uncle didn't work for Barings Bank along side Nick Leeson.

[craic]

It's been long the case that if you are listening to this lady for financial/investing advise, you are still in some kind of kindergarten and should not be using real money.

[blackcap]

One good thing about her is that she says you dont need an investment manager because 3/4 of them will do worse than the index.
.

Couldnt agree more. The prob with managers is that they tend to hug the index anyway but incur larger costs and thus tend to under perform.

[Bjauck]

Couldnt agree more. The prob with managers is that they tend to hug the index anyway but incur larger costs and thus tend to under perform.
The unlisted funds (eg unit trusts) tend to underperform whereas their listed counterparts (LICs and ITs) tend to do better...Unlisted vehicles have greater compliance costs and need cash to cope with churn etc.

[BIRMANBOY]

Three years doesnt make you an "amateur" in my mind Moosie..nice to see you understating your competance however...modesty becomes you:)
lol, totally bagged the investor (hey, sometimes we get lucky, that's life!), but suggesting amateurs can't pick stocks is rubbish. I've been doing it for 3 years now and outperformed the NZX (other than my latest foray into DIL; but I haven't sold yet, hence why they call it "unrealised" profit/loss!). Agree with her on the property market piece though; good investment as long as you don't load up on debt like uneducated people LOVE to do.

Think you should take this to the off-market thread though

[modandm]

The unlisted funds (eg unit trusts) tend to underperform whereas their listed counterparts (LICs and ITs) tend to do better...Unlisted vehicles have greater compliance costs and need cash to cope with churn etc.

for retail investors maybe. Its funny everyone bags fund managers but then almost all sophisticated institutional investors choose active management - there is a reason why. Some managers do genuinely consistently outperform, or deliver superior risk adjusted returns. As to the costs, for mandates >50m USD, costs are sub 0.5% all in.

[peat]

I tend to go with Mary on this, esp when you consider her role in the industry and her target audience. If someone asked you what to do with a large amount of money and you suggested putting it all into one listed co. because your uncle worked there you would be negligent, and even more to the point you would be lucky if it paid off, and considered stupid if it didnt

[CJ]

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10913514

Good advice from Mary here as well. While you can tell she wants to say "just use an index fund", she doesn't. She accepts they are doing it right (diversified) but points out 1/4 of their money in one is probably a bit to much.

Quite good for generic advice.

[BlackCross]

for retail investors maybe. Its funny everyone bags fund managers but then almost all sophisticated institutional investors choose active management - there is a reason why. Some managers do genuinely consistently outperform, or deliver superior risk adjusted returns. As to the costs, for mandates >50m USD, costs are sub 0.5% all in.

Times are changing with the advent of ETFs. At least outside of NZ they are...

".... Fees that were acceptable when returns were high now look unsightly. Also, institutions are firing “active” managers and moving money to cheaper “passive” managers who merely match market benchmarks.
“For every five active mandates that come up for renewal, three end up in passives or exchange traded funds,” said one fund manager interviewed......."

http://www.ft.com/cms/s/2/efa26a96-e98f-11e2-bf03-00144feabdc0.html#axzz2Zdsa3NiS

[Schrodinger]

She needs a copy of Intelligent Investor

[CJ]

She needs a copy of Intelligent InvestorMost people dont have time to read the Intelligent Investor, let alone apply its thinking. For those, index funds are good. For those willing to take the time, she accepts that as a strategy - and yes maybe the person from the first question should have read the Intelligent Investor rather than "a woman's guide to shopping for shares"

[Whipmoney]

I think Mary Holm is stuck in the 90's theory of the EMH and CAPM. Times and theories have moved on and the assumptions implicit in the CAPM and EMH are not so set in concrete as they once were.

Mmmmm CAPM is concrete and despite several academic attempts it has not been disproven to date. The big caveat however is that it is that in reality there is no suitable proxy for the "Market Portfolio".

[Schrodinger]

Most people dont have time to read the Intelligent Investor, let alone apply its thinking. For those, index funds are good. For those willing to take the time, she accepts that as a strategy - and yes maybe the person from the first question should have read the Intelligent Investor rather than "a woman's guide to shopping for shares"

Its actually a fast read. There is a newer version with a Jason Zweig commentary which is very informative and fast. Buffett talks about the 3 key chapters that everyone should read the rest is not as important.

For $15 this is a good investment. In fact I recommend it for required reading.

[RTM]

So this is the book that you refer to ?
The Intelligent Investor REV Ed. Benjamin Graham



Its actually a fast read. There is a newer version with a Jason Zweig commentary which is very informative and fast. Buffett talks about the 3 key chapters that everyone should read the rest is not as important.

For $15 this is a good investment. In fact I recommend it for required reading.

[Schrodinger]

So this is the book that you refer to ?
The Intelligent Investor REV Ed. Benjamin Graham

Yep

http://www.amazon.com/The-Intelligent-Investor-Rev-ebook/dp/B000FC12C8

[RTM]

Thanks....got it...iPad version. Hasn't the world changed !

[winner69]

Here is a good book
http://www.fishpond.co.nz/Books/Get-Rich-Slow-Mary-Holm/9780143020769

[Mista_Trix]

Or for those of you that want to take a look at it before you buy it, http://www.fxf1.com/english-books/The%20Intelligent%20Investor%20-%20BENJAMIN%20GRAHAM.pdf :-S Ahhhh hasn't the world changed .. even further... I'm not advocating copying this by the way, just for anyone considering its purchase and wants more of a look.

[born2invest]

I read books from Ben Graham, Phil Fisher, etc that are over 50 years old and the investment lessons are still better than anything else in the library or bookstore.

Goes to show that even after all the technological changes, the internet, TV's, radios, improved transport, etc simple investment strategies remain the same.

My Dad asked me a few years ago after he saw me reading Common Stocks, Uncommon Profits if anything had changed. I said not a single thing. What worked in 1960 works today.

[peat]

Hi.
Thanks for the recommendation to read "The Intelligent Investor - BENJAMIN GRAHAM"
I really enjoyed it. A very defined defensible approach - gives a clear modus operandi. I love the simplicity of the asset allocation, and the directness of the fundamental analysis requirements. They are quite stringent indeed especially in terms of long stable earnings

I've analysed WBC in the books defensive investor terms (anyone interested ?) however it is not an industrial and so I wonder if this allows more latitude in the ratios or not.
Graham himself does comment that there is no difference in returns between industrials and financials and states that he has no helpful remarks but goes on to counsel that "the same arithmetical standards be applied"
However the nature of liabilities (term) is not clarified so well in the WBC balance sheet so I had to make some somewhat arbitrary decisions to determine the results. One would probably have to have a duration based breakdown of the liabilities (deposits). I note someone in the Heartland thread having a bit of a go about this aspect and raising it as an issue for the new bank.

Sorry Lizard I haven't stayed on topic.

[Sauce]

I read books from Ben Graham, Phil Fisher, etc that are over 50 years old and the investment lessons are still better than anything else in the library or bookstore.

Goes to show that even after all the technological changes, the internet, TV's, radios, improved transport, etc simple investment strategies remain the same.

My Dad asked me a few years ago after he saw me reading Common Stocks, Uncommon Profits if anything had changed. I said not a single thing. What worked in 1960 works today.

Theres a simple reason for that. It's called 'Human nature'.

:)

[Sauce]

Mmmmm CAPM is concrete and despite several academic attempts it has not been disproven to date. The big caveat however is that it is that in reality there is no suitable proxy for the "Market Portfolio".

I think what you say is correct; that CAPM is mathematically correct and disprovable so long as you are happy to define risk as volatility.

This is where, in my opinion, the real divergence between theory and practice comes in with the CAPM. In practice, volatility can have both a lot or very little to do with risk because of human behaviour.

[Winston001]

Or for those of you that want to take a look at it before you buy it, http://www.fxf1.com/english-books/The%20Intelligent%20Investor%20-%20BENJAMIN%20GRAHAM.pdf :-S Ahhhh hasn't the world changed .. even further... I'm not advocating copying this by the way, just for anyone considering its purchase and wants more of a look.

Thanks for the link. Funny thing: I have recommended The Intelligent Investor to various people over the years on the basis of Warren Buffets advice, but never actually got around to reading it myself. Will do now. :D

[blackcap]

I think what you say is correct; that CAPM is mathematically correct and disprovable so long as you are happy to define risk as volatility.

This is where, in my opinion, the real divergence between theory and practice comes in with the CAPM. In practice, volatility can have both a lot or very little to do with risk because of human behaviour.


Sorry I never got back to you earlier Whipmoney but Sauce raises a point that I find interesting. What I meant with my earlier statement about CAPM is that I understand it uses backward looking volatility to measure beta. But past volatility is no reflection of future volatility is it? That for me is the big flaw in the CAPM. It almost uses the TA flaw that it itself scoffs that backward looking wizadry can predict forward prices.
I do understand assumptions must be made but assumptions are just that.
I do not know enough about the market portfolio you mention and the proxy required. I would have thought all stocks that make up a countrys bourse would be a suitable proxy. I may have to do some more study. (Its been a good 20 years since I last had a good look at CAPM in a theoretical sense)

[Sauce]

I may have to do some more study. (Its been a good 20 years since I last had a good look at CAPM in a theoretical sense)

Sounds perfect. Charlie Mungers advice was the best: Learn it, and then never use it again.