3 minute game

I have a client who loves to tell me that in the downturn last fall and winter she lost only 20% in her little play account compared to a loss of over 29% in her portfolio I manage. (Let me correct that, what she says is that she lost 20% while I lost her 50%. ) She laments that I can't be as nimble, chalking it off to the fact that I manage so much money. It was easy for her to know exactly what do do at exactly the right time. I want some of that.

Now, what's wrong with this picture? First, she'd be a rare investor indeed if she were actually aware of the percentage return on that little account she has. Few people actually measure the whole and instead just focus on one or two trades. But it's the whole that counts.

Secondly, for arguments sake, let's say that during those agonizing months of September through December of 2008, she actually lost only 20% when everybody else lost much more. Does it really matter when it's only 4 months out of a lifetime of investing?

Another clients wants to know how far up we are from the bottom. As it turns out, the "bottom" hit on March 9th, a day notable in no other respect than it simply (as of this writing) was the day the market bottomed. He wants to know if our portfolios have returned that same percentage since that day. I say no, we've returned just a bit less since March 9th. "Oh" he says.

But what's the magic of beating the market since March 9th? I might have said, we're beating the market since March 3rd, and since the beginning of the year, or over the past 12 months or even for 10 days during February - the measuring periods are infinite and I sure can find plenty for which we're winning.

I shared this random short-term performance measuring phenomenon with a friend and she said it's like being in a football game and focusing on whether you scored more points than your opponent during 3 minutes of the 3rd quarter. So what if you did? Does it matter?

Stuff Happens

It's been a few years since my last post. I saw the movie Julie and Julia over the weekend and decided to go back to see what I'd blogged in those halcyon days before THE CRASH and to reconsider blogging again.

Anyway, long story short - I can't believe how freakin' right on I was in blogging about financial stuff IN 2005 that actually came to fruition IN 2008.

So, I'm going to blog again. Except this time my material will be interesting and engaging. It'll come from my client chronicles. The material is sometimes funny and sometimes serious as I help clients slog through their investing foibles. You'll get a firsthand look into the stupid decisions others have made and in the process learn how to avoid those same pitfalls. Some, like the one entitled "Meet Abigail", I've used in the proposal for my book, Stocks and Blondes, other stuff's just from emails and cocktail party conversations.

Bon Appetit (that's a little Julia humor.)