Feedback in today:
Dear Michael, As you know by an email from me some months ago I am a fund manager trying to start my own Asset Management firm ruled by short-term trend following strategies. A hard job when you remember my location: Madrid, Spain. Here, anything different from buy and hold sounds like if you were trying to sell a new Madoff. Today I was in a meeting with a colleague, a long-only manager of about Euro 300M, who started his own management company a few years ago in Switzerland and he said something I found very interesting. I wanted to share with you and maybe your blog readers (feel free to correct my horrible English, please). He told me we, the systematic managers, cannot sell our management because people needs ‘stories’ or ‘tales’ to [sell people], not just ‘profitable management’. I was in shock. What did he mean? He explained me that when he argues why he is buying this stock or this other stock for his funds, he can be right or wrong, he can win or lose a lot of money, it doesn’t matter. The important thing is what remains in the head of the client, because the client still thinking the same old fashioned way: “At the end, I have a share of something real, like a house, like a stock, that always can recover and rise again because is real and fits my way of thinking about how the world works.” So at the end, long-only managers are selling ‘stories’ about the ‘real material world’ that make sense in the mind of people/clients. So they still buying long only funds again and again regardless their performance. We, systematic managers, we are selling ‘positive expectation’, ‘absolute returns’ based in immaterial models that are ‘too abstract’ for the mainstream. Regardless if our approach provides positive returns and can be understood by any 6 years old child, people still preferring to buy the old movies that ‘make sense’ in their heads. Maybe we have too many enemies to fight at the same time…Thank you for your educational effort, again. Best regards, Marcos
