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Re: The knives are coming out for poor old Woody.
Posted: December 4th, 2017, 1:15 pm
by OhNoNotimAgain
hiriskpaul wrote:t. This may change with the rise of smart-beta indexes, which by definition do not track the whole market. So in future active managers may in aggregate be able to outperform if the smart-beta sector becomes a significant size and in aggregate underperforms the market
That does not follow. An SB fund can hold all of the market, but with different weights. At some times they might track the market, do better or worse.
A fund with a bias to value, perhaps like Woody, might be expected to underperform a market that is over-enthusiastic, as he did in the dot.com boom, only to outperform in the subsequent crash. However, his recent returns are altogether different as they are generated by negative alpha - stock picking, rather than an a systematic bias.
Since we have not had a bear market for 8 years SB has yet to be tested in all conditions.
Re: The knives are coming out for poor old Woody.
Posted: December 4th, 2017, 1:19 pm
by GoSeigen
hiriskpaul wrote:The evidence that index trackers beat most active management is widespread and remarkably uniform, assuming the trackers you are talking about are the whole of market, cap weighted kind and not some kind of smart beta index that worked brilliantly in back test.
Paul, if you are addressing me, my comments are not about fees. I know that fees subtract from active performance. My point is about the market and that if too many people are tracking there is opportunity for exploiting that by taking avantage of mispricing in subsets of the index. My claim is not that this mispricing hugely disadvantages tracking relative to active management, but that it results in overall misallocation of funds which depresses market performance for everyone. I can't prove it but it seems to me to be a singificant and growing risk.
Meanwhile to attempt to take advantage of my hunch my protfolio is increasingly constructed short trackers and long sectors that I believe are undervalued. Very happy to be proved wrong either rhetorically or by market outturn.
So far it looks very interesting, with the FTSE moving broadly sideways for years, but some sectors, eg materials, banks, retail, tech yo-yoing wildly.
GS
Re: The knives are coming out for poor old Woody.
Posted: December 4th, 2017, 2:12 pm
by hiriskpaul
GoSeigen wrote:hiriskpaul wrote:The evidence that index trackers beat most active management is widespread and remarkably uniform, assuming the trackers you are talking about are the whole of market, cap weighted kind and not some kind of smart beta index that worked brilliantly in back test.
Paul, if you are addressing me, my comments are not about fees. I know that fees subtract from active performance. My point is about the market and that if too many people are tracking there is opportunity for exploiting that by taking avantage of mispricing in subsets of the index. My claim is not that this mispricing hugely disadvantages tracking relative to active management, but that it results in overall misallocation of funds which depresses market performance for everyone. I can't prove it but it seems to me to be a singificant and growing risk.
Meanwhile to attempt to take advantage of my hunch my protfolio is increasingly constructed short trackers and long sectors that I believe are undervalued. Very happy to be proved wrong either rhetorically or by market outturn.
So far it looks very interesting, with the FTSE moving broadly sideways for years, but some sectors, eg materials, banks, retail, tech yo-yoing wildly.
GS
Fair enough, but really wide trackers, such as those following the S&P 500 or a World index tracker are hard to game as the stock movements in and out are so immaterial. The narrow indexes and the multitude of smart-beta, alternative weight and sector specific index trackers must present opportunities though as it is clear in advance what they need to buy and sell in order to rebalance back to whatever index they are following. That is why I see alternative weighted trackers as a good thing for the market. They should also help to address the risk of misallocation of funds. For example, if enough people decide that the energy sector is undervalued and pile into Energy ETFs, possibly shorting the S&P as well, then that helps to address potential capital misallocation risk. Admittedly not as good as a lot of people making decisions about individual stocks, but as WB said in the video, the bulk of the big pension funds, etc. show little sign of following his advice and just buying the S&P 500! So hopefully there will continue to be plenty of stockpickers around.
Re: The knives are coming out for poor old Woody.
Posted: December 4th, 2017, 2:38 pm
by hiriskpaul
OhNoNotimAgain wrote:hiriskpaul wrote:t. This may change with the rise of smart-beta indexes, which by definition do not track the whole market. So in future active managers may in aggregate be able to outperform if the smart-beta sector becomes a significant size and in aggregate underperforms the market
That does not follow. An SB fund can hold all of the market, but with different weights. At some times they might track the market, do better or worse.
A fund with a bias to value, perhaps like Woody, might be expected to underperform a market that is over-enthusiastic, as he did in the dot.com boom, only to outperform in the subsequent crash. However, his recent returns are altogether different as they are generated by negative alpha - stock picking, rather than an a systematic bias.
Since we have not had a bear market for 8 years SB has yet to be tested in all conditions.
Well to extend WB's scenario, lets say that of the half of investors that do not passively track the whole market, half of them invest in an SB fund, the other half in actively managed funds. In that case, before fees, either the SB fund will outperform active over a period, or active will outperform SB. However, if the SB fund rebalances, that would present an opportunity for the active quarter to exploit the SB fund at the margins, because they could anticipate what the SB fund wanted to buy and sell. In other words the SB investors provide a competitive opportunity to the active fund managers that WB's totally passive "No Energy" half who just track the whole market do not.
Re: The knives are coming out for poor old Woody.
Posted: December 5th, 2017, 8:31 am
by OhNoNotimAgain
GoSeigen wrote:hiriskpaul wrote:The evidence that index trackers beat most active management is widespread and remarkably uniform, assuming the trackers you are talking about are the whole of market, cap weighted kind and not some kind of smart beta index that worked brilliantly in back test.
Meanwhile to attempt to take advantage of my hunch my protfolio is increasingly constructed short trackers and long sectors that I believe are undervalued. Very happy to be proved wrong either rhetorically or by market outturn.
So far it looks very interesting, with the FTSE moving broadly sideways for years, but some sectors, eg materials, banks, retail, tech yo-yoing wildly.
GS
It is not so much that some stocks are undervalued but that some are very over-valued.
The dramatic fluctuations on the afternoon of 30th November led to a disparity of several hundred basis points in the value of UK index priced at midday compared to prices at CoB. That volatility was largely driven by big fluctuations in the price of the FANG stocks in the US where, presumably opinions on value must be quite fluid. Those FANG stocks must make up a significant percentage of US indices.
Re: The knives are coming out for poor old Woody.
Posted: January 9th, 2018, 5:36 pm
by scotia
https://www.hl.co.uk/news/articles/a-fo ... l-woodfordAnother interview with Neil Woodford. This is strangely different - no mention of a bubble, with positive statements for the UK market. And a strong belief in his unquoted investments coming good.
Re: The knives are coming out for poor old Woody.
Posted: January 10th, 2018, 8:03 am
by forrado
Indeed, I’ve noticed of late a subtle change in the tone of siren voices - of which Woodford is one. I’m now starting to hear the term ‘goldilocks’ to describe a market scenario that is neither too hot nor too cold. Consensus opinions of a looming cliff edge seemingly receding into the distance as global economies apparently recover in synchronicity.
I am reminded that Carl Jung coined the term “synchronicity” more than 60 years ago to imply “meaningful coincidences that occur with no causal relationship yet seem to be meaningfully related.”
Maybe it’s dawning on Woodford and his like that, after all is said and done, stockmarkets are primarily leading indicators of the health of real economies and, that round the world, real economies are in better shape than previously thought.
Re: The knives are coming out for poor old Woody.
Posted: January 10th, 2018, 8:11 am
by OhNoNotimAgain
forrado wrote:Indeed, I’ve noticed of late a subtle change in the tone of siren voices - of which Woodford is one. I’m now starting to hear the term ‘goldilocks’ to describe a market scenario that is neither too hot nor too cold. Consensus opinions of a looming cliff edge seemingly receding into the distance as global economies apparently recover in synchronicity.
.
Active managers become an echo chamber for the market. None are going to say sell in a rising market.
Re: The knives are coming out for poor old Woody.
Posted: January 10th, 2018, 10:26 am
by Dod101
What comes next is most likely your taxi driver giving you stock tips. Then you know.........
Why should anyone listen to Woodford? He is certainly not infallible and of course as I have said before a commercial fund managers interests are not the same as ours.
Dod
Re: The knives are coming out for poor old Woody.
Posted: January 12th, 2018, 1:47 pm
by OhNoNotimAgain
and yet on 1st December he said this
Woodford warns on red flashing lights
Investors piling cash into certain global stocks has created a bubble the likes of which has been seen only twice in the past thirty years, according to fund manager Neil Woodford.
https://www.ftadviser.com/equities/2017 ... ng-lights/
Re: The knives are coming out for poor old Woody.
Posted: January 12th, 2018, 4:47 pm
by richfool
Guess who gets a mention, (at 10 minutes in and through 16 minutes in), on this IC Podcast:
https://www.investorschronicle.co.uk/fu ... ded-funds/
Re: The knives are coming out for poor old Woody.
Posted: January 29th, 2018, 1:41 pm
by Quint
Over a year i reduced my holding of the CF Woodform Equity Income fund to zero, selling the last holding during the summer at a small profit. In the short term it has proven to be the right decision.
I also brought in to the Patient Capital Trust at launch and sold out nearly 3 years later at a modest loss. Again in the short term a good move as it has fallen further since with little prospect of a turn around in the short term.
His day may come back around but in the meantime there are better options out there. Patient Capital may make money in the longer term but other managers are delivering better returns right now.
Re: The knives are coming out for poor old Woody.
Posted: January 29th, 2018, 4:22 pm
by OhNoNotimAgain
Moderator Message:
Redsturgeon: Please do not directly comment on named individuals in this way
Re: The knives are coming out for poor old Woody.
Posted: January 31st, 2018, 3:42 pm
by Quint
I doubt the Capita situation today will help.
Re: The knives are coming out for poor old Woody.
Posted: January 31st, 2018, 3:53 pm
by Alaric
Quint wrote:I doubt the Capita situation today will help.
The data is nearly a year out of date, but according to the 2017 Report & Accounts, as of 17th February 2017, Woodford Investment Management held 10.80 % of the voting rights and Invesco 9.82%
Re: The knives are coming out for poor old Woody.
Posted: January 31st, 2018, 4:56 pm
by scotia
An extract from this article dated 31/1/2018
http://www.iii.co.uk/articles/478747/ca ... n-sink-jobA fortnight ago, Neil Woodford's Income Focus fund revealed that it had boosted its Capita exposure after the stock fell 12% in December. It also wrote about the potential for significant value creation in the future as the group returns to the "high quality, successful and well-run business that it used to be".
Re: The knives are coming out for poor old Woody.
Posted: February 1st, 2018, 8:33 am
by OhNoNotimAgain
Moderator Message:
Text removed. As you are well aware there is no update available to the graph. Please take more care on your quality of posts. Thanks in advance. Raptor.
Re: The knives are coming out for poor old Woody.
Posted: February 2nd, 2018, 8:05 am
by Raptor
Moderator Message:
This is thread is now locked. It has run its course and has, IMO, become a "witchhunt". Raptor.