On Sep 4, 2:02*pm, nonse...[at]mynonsense.net wrote:
- quote -

analysis of the company's business forms the basis for buying (or not)
the stock. This topic has been discussed previously on these boards,
with the general consensus (I disagree) : the average investor does
not have the time nor intelligence nor resources to analyse companies
and construct his own portfolio. Peter Lynch mentioned that with 45
minutes a weekend the average man can manage his own portfolio. Mnay
fund managers do not even know what the companies in their portfolios
do, since they "invest" on criteria such a "momentum" and "market
correlation (how the historic movement of the stock matches historic
market movement)".

Also, looking at other companies' operations may lend insight into how
to run your own company.

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nonsense[at]mynonsense.net writes:

- quote -

People have different skills. Someone who's a great CEO
may not be a great financial manager. Chances are that
he's got the help of a great CFO. I'd expect there to
be more in common between CFOs and investment managers.

- quote -

Again, you seem to be confusing "running a company" with
"managing finances". They are different (if in some places
overlapping) skill sets.

- quote -

Why would they? A guy who owns and runs a car repair shop
is probably vastly better at repairing (and knowing what
it'll take to repair) cars than he is at computing rates
of return and financial feasibility. So he consults with
his accountant, his bank, and perhaps his financing partners
before he, say, borrows a heap of cash to buy new equipment.

It's his job to convince his partners that he'll use that
equipment to profitable purpose and that he'll pay them
back. It's their job to decide whether they think he
can or not and how much to give him to do so. Different
skills.

- quote -

Seems kind of silly. Why should you?

Of course, if they're doing more than simply failing to
outperform - if they're doing things like managing risk,
handling volatility, dealing with tax efficiency and such,
perhaps you are getting your money's worth. If not,
then, again, why should you pay them all that?

- quote -

Sure. You have a heap of money to invest? Connections?


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I notice most fund managers have fancy corporate titles or Ivy league
degrees but have very little street smarts business experience. They
typically have climbed to the top of the ladder of investment firms or
have Phd's, but almost none have any experience with the day to day
nitty gritty of actually running a business.

How are these the kind of people to trust with your money on which
company is going to do well? Can the complexity of a company be
reduced to a fancy spreadsheet calculation? I run my own little
business, and even I can not say with any certainty what will happen
six months down the road!

So my question is, shouldn't actual business owners be the best people
to judge whether a company is good for investment? Why should I pay 1%
management fees for people who can not consistently outperform random
luck? Should I think about becoming a venture capitalist so I can
invest in people I get to know personally?

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