Wednesday, February 15, 2006

Which money manager?

I gave up long ago trying to find the best mutual fund manager. Every time I'd find the best, the next year that one wouldn't be the best anymore and someone else, coming out of the blue, would be.

It's a story well known in the financial services industry, you'll hear it touted all the time on financial talk shows as a "warning." I got to the point where I just looked for someone I liked, who was easy to work with, that did a decent job over the last five years, and, as was the case years ago with the well managed American Century, someone that had fewer choices. Yes, that's fewer choices!

I was wasting too much time, and going crazy, trying to decide from the 80-250 funds that Vanguard and Fidelity, although two of my favorite companies then, had to offer. Other companies like Nicholas Funds and American Funds (not American Century) had too few options in those days. American Century, then Twentieth Century, had just the right amount of well managed and varied choices.

We take our chances in the game!

People say to me "you can't time the stock market." Bull... Bob Brinker has done it successfully (he's made many people millionaires) for the past 15 years. The only problem for us in this revelation is that we would have had to pick Brinker way back then and have stayed with him the whole time. That wouldn't have been so easy, because there are lots of "Brinkers" out there and most of them don't do so well, average at best, and some are disasters.

Which Brinker do you risk it on?

I visited an investment manager in Roseville during December, to see if he could do a better job with my portfolio than I could (it was a COSTCO, $25 giftcard incentive deal). I figured it wouldn't cost me anything but some time, and I'd learn something new. I wouldn't have even been willing to invest the time, if it weren't for the fact that I hadn't visited one of these firms in years. So I figured I could use an update and maybe he "could" do a better job.

After a two and one half hour interview/discussion, days of researching the companies reputation on my own and three weeks of carefully considering the manager's proposal, I came to the conclusion to decline the offer and stay where I was. The experience wasn't wasted, though: I really enjoyed the discussion I had with the manager, he had some good advice and it motivated me to make a reallocation (buying some peace of mind) in my portfolio that was probably long over due.

Did I make the correct choice?

Well... I'll have to look back at what the above manager did for his clients in the next 15 years. Looking back, also known as "Monday morning quarterbacking," is the easy part—it doesn't involve any risk or really much work. Sure, I may be kicking myself in the proverbial behind... or I may be swiping my hand slowly across my brow, glad I trusted my research and, most importantly, my instincts.

Either way, I guess it's on me! No more blaming the money guys after the great education I received through the '90s and the inevitable "2000 Crash." I really wish I could help more, I know how agonizing it is.