So I’m sure every one here has seen the humurous war between Icahn and Ackman. Obviously successful people like this have always had big ego’s but it seems to me like the majority of famous wall streeters just follow trends and do very little actual research. Ackman is an exception to the rule, as I have always found his research to be very detailed. The vast majority of presentations I see though are not overly impressive. It is generally all about trying to express their intelligence to the audience. The presentation generally starts with a slide on some bs painting or quote from aristotle or something similarly ridiculous in an attempt to show their well roundedness. From there the presentation will provide him/her to show off their large vocabulary, which to me automatically loses class. They are generally verbose taking a simple topic and breaking it down in an attempt to appear sophisticated (e.g. when talking about changing ratios, pointing out expanding/contracting numerators and denominators… I think the target audience is smart enough to figure it out themselves). At the end of it I’m left feeling like I wasted an hour of my life. The whole thing could be summed up by saying I’m long/short XYZ co. because a.b.c. I hate to rant like this but I’m starting to think that really all it takes to be successful is having access to capital and then just following other smart investors a la Whitney Tilson.
“There are two kinds of investors, be they large or small: those who don’t know where the market is headed, and those who don’t know that they don’t know. Then again, there is a third type of investor - the investment professional, who indeed knows that he or she doesn’t know, but whose livelihood depends upon appearing to know.”
William Bernstein - The Intelligent Asset Allocator
You should read Ray Dalio’s Bridgewater letters if you can find them. They are amazing.
I have and although I do find him intelligent, I think he is missing the big picture. I read a white paper of his on what creates empires or something to that effect. He believes it works as a cycle that is predetermined. I don’t agree with that view. I think far too many investors, and really people in general, are leaning towards the belief that history always repeats itself. However, it seems to me that trying to compare economic cycles in the 1700’s to today is foolish. They aren’t even comparable. I would equate it to trying to compare the game of croquet to golf. That being said, I do appreciate his work towards risk parity. It will be interesting to see if risk parity really takes off across the industry.
I agree with most of what you said except with the assertion that Whitney Tilson is a smart investor.
Edit: Oops, just re-read what you wrote, if you meant Tilson just follows other smart investors, then I completely agree with what you said.
Why don’t you feel WT is a smart investor?
Whitney Tilson sucks. It’s been well documented. Here and here and here and investors fleeing him here…it goes on forever. He’s a joke.
As for Ray Dalio, can’t argue with results, though I really don’t like risk parity. It’s neat how nicely risk parity works when interest rates decline for 30 years. I have very little faith it’ll be as smooth a ride when we enter a secular bear market for fixed income (provided that ever happens).
http://www.scribd.com/doc/100535899/T2-Accredited-Fund-Letter-to-Investors-June-12
His results have been good. 2011 was annus horriblis for him, that’s for sure, but overall, seems a very good value investor.
^^Morningstar thinks he’s a very bad value investor fwiw.
Yeah I can’t think of an original idea that Tilson has ever pitched and I absolute hate how he indicates that he has a small position by saying “we’re long/short just a smidge of XYZ”… just say we have established a small position already!
Frankie had a nice commentary on fund managers being sheep. The reader’s digest version:
Frankie - Yo, PM, I found this new small cap value stock that is intrinsically undervalued and technically ready to explode on a breakout.
PM - No. It’s too risky. Let’s stick to our ‘safe stocks’ that looks good in the headlines.
Frankie - It’ll also diversify our portfolio improving the Sortino Ratio and reducing the beta and downside deviation.
PM - It may, but I don’t want to have to explain it to our investors, it’s complicated.
Frankie - This Fxcking job is stupid!
PM - It is, but by sticking close to the index, we’ll keep our jobs.
A valid excuse for some herding mentality is if the PM runs a strategy that’s conscience of tracking error. Did everyone crowd into Apple because they’re sheeple or because it was 7% of their benchmark? If you have tracking error constraints, having a 0% allocation to Apple would amount to a gigantic short position.
But, yes, people are sheeple.
I can think of one - short Netflix. He had to cover whent he shares soared. When the shares tanked after he covered he went long on it. Talk about being wrong and lacking conviction at the same time.
Yeah the dude is a Class A jabroni!
I don’t get it. The guy has had very good performance but posters on an anonymous internet forum think he’s an idiot.
Go figure.
There is a group of fund managers that he tags on to… ackman, einhorn, et cetera. I guess it’s true that all that matters is returns… but he should not be looked at as some type of market guru for just playing copycat… and as I said earlier… the guy is totally a jabroni 
BIll miller had an awesome 15 year track record before he blew up.
Performance number is important, but it’s not the only thing that tells you if someone is good.
You don’t have to agree with me WT is not a good investor, we can agree to disagree.
It’s also because Tilson is a tool. Over the last two years he spent just as much time on CNBC as he did running money. Unfortunately for WT just about every single public call he made went in the exact opposite direction. It’s pretty bad when you have to announce to your investors you’re going to reduce public appearances to focus on managing money. No wonder people are redeeming. Total tool.
He doesn’t even run that much money, and the money he does manage is mostly his family’s. He got famous by being a good guest on CNBC. Now he’s infamous as a complete washout.
I wouldn’t be surprised if you had better numbers.
And I don’t believe he’s praising your savvy trading Palantir!