Choosing to invest in Cenveo isn’t a tough decision, when the money your risking isn’t your own.
Would you eat at a restaurant where the chefs didn't eat their own cooking?
Would you have joined the Hair Club if the president weren't also a client?
Then why would you invest in a Mutual or any other Fund where the Managers don't put their own money alongside yours?
According to data provided by Morningstar, only 49% of Mutual Funds have at least one manager who has invested in the fund they administer.
In 46% of the domestic stock funds surveyed, the Fund Manager hadn't invested a dime. Other asset classes were far worse with nearly 60% of foreign stock funds reporting no manager ownership, two-thirds of taxable bond funds having no managers with money in the fund, up to 70% of balanced funds having no manager cash and some 78% of muni bond funds having shareholder cash only.
Ouch. That's a lot of managers who are going out to eat, rather than eating their own cooking.
I have little value for Fund Managers also taking into consideration their proven performance.
In 2012, with the S&P returning 16% and Russell 2000 up 16.3%, on nothing but multiple expansion in a world where risk has been eliminated despite persistently declining revenues and cash flows, a whopping 88% of hedge funds, as well as some 65% of large-cap core, 80% of large cap value, and 67% of small-cap mutual funds underperformed the market, according to Goldman's David Kostin.