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2 Comments for “The Effect Of Corruption On The Markets”

  1. An interesting comparison for Mr. Ritholz would be looking at the TSX since 2000 in nominal terms, and divided by the $CDN gold price or the same period. Looking at Canadian bank stocks would be another point of reference.

  2. I fail to understand why the average investor continues to listen to pretentious theorists contemplating the economic equivalent of the number of angels that can dance on the head of a pin.

    More and more of the “smart money” is going into quant-based programs that don’t care which way the market moves. Look at the new billionaire fund managers and you’ll see a group that has engaged technology to ensure that their funds are ALWAYS making money.

    Even IF the wannabe economists on these sites who offer up their opinions as marketing campaigns for their fund management arms are correct, they spend incredible amounts of dead time in which their AUMs are earning little or nothing waiting for their forecasts to come true. They call it “safety of capital,” when in fact it’s a certain path to the poorhouse as the returns they achieve may or may not even cover inflation, depending on whose inflation numbers you believe.

    One such manager recently released her results since 2003 touting a slightly better than 4% annual return as better than the overall market. Therein lies part of the problem. These marketers spend 50% of their time ridiculing the results obtained by strict buy-and-holders in the bear market we’ve been in since the early 2000′s, and the other 50% of their time bragging about how they out-ran this one-legged runner by benchmarking against this very same sad market performance. Fact is, if I’d put my money under my mattress in 2000, I could brag that I’d significantly outperformed the Nasdaq over the past 11 years.

    Meanwhile, there are fund managers out there who are getting better than 100% returns over the past 36 months, including several who more than doubled their money in the crash of 2008. How? They don’t pretend to understand the thousand variables that go into establishing market direction. They simply use technology to instantly react to said direction and collect the returns…and they don’t benchmark against anything. Their interest lies in REAL returns, not comparisons against a pathetic crawling bear.

    The goal here is to make money; not to be right or to appear intelligent before an audience of like-minded peers in order to attract funds from the financially naive.

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