New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

[augustabound]

LOL, fair enough.

I liked your guest post on Brad's blog, part of the reason I asked.

[uhoh]

LOL, fair enough.

I liked your guest post on Brad's blog, part of the reason I asked.

oooohhhh !! send the link

I'm one of scomac's fans and didn't know about it!

[augustabound]

Sure thing. I'm sure Brad and Scott wouldn't object.

http://nurseb911.blogspot.com/2007/11/i ... al-on.html

[brad911]

I had wondered early today why statcounter exploded the past 2 days Augustbound

Great find btw George$, thanks for sharing. Always nice to see that there is another BRADLEY out there willing to share views & perspectives that align to sensible thoughts on investing and the market in general.

[JaydoubleU]

I especially enjoyed this Bradley article:

http://blog.steadyhand.com/globe_articl ... tem=682684

And if there's any truth to it, then we should all be really excited about the current market turmoil, for it represents a terrific buying opportunity.

[George$]

This morning's G&M article from Tom Bradley
The increasing complexity - and masked risks - of wealth management
a bit ...

But in any investment structure, the majority of the extra return, if there is any, belongs to the buyer who is taking the risk.

In too many products today, this is not the case. The current generation of structured products have little or no transparency and, as a result, they mask the risks being taken and how the potential rewards are being apportioned.

[George$]

From the Globe Investor magazine insert yesterday
Steadyhand Diaries by Tom Bradley
a bit ...

February 21, 2008
PH&N announced it is selling out to Royal Bank. Our blog says it all--"Holy shit!"

It's a sad day. I hate to see a great Vancouver firm get absorbed into Canada's biggest bank. PH&N will be indistinguishable in a year or two.

I never wanted this to happen.

But the deal makes us more unique, which is good...I think. And maybe the bank will bring attention to our small segment of the market.

As we head toward the end of our first year, we're managing $30 million for 300 clients. With weak markets and just a one-year track record, we've got to keep our expectations in check. Only a small portion of our target clientele will invest right now. The early adopters either know us personally or were keen enough to look at our managers' long-term performance.

So far, it's playing out as we'd hoped. We've got a great team and set of managers. We've been able to separate our approach and investment philosophy from the herd. And our early clients are passionate about Steadyhand. Who knows? Perhaps we have a chance to be the "next" great independent Canadian firm.

and unfortunately ..

June 7, 2007
...... But TD Waterhouse also called to say they wouldn't be listing our funds. Apparently we're too small and we cause them too many operational problems. Translation: You need a trailer fee.

The TD news is a blow. We may be direct-to-client, but our business model still assumes that 25% to 30% of our clients' assets will be held through other dealers, mostly discount brokers. TD is the leader in that category. Fortunately, most of the other banks and dealers are signing on. In the meantime, we don't want to pay a trailer to a discount broker. An ongoing advice charge for no advice doesn't make sense.

[Bylo Selhi]

From the Globe Investor magazine insert yesterday
Steadyhand Diaries by Tom Bradley

And from today's G&M, Inside the mutual fund industry.

In yesterday's piece Bradley seemed to be against indexing. In today's interview he seems a bit more conciliatory, e.g.

My advice to you would be to simplify what you and your kids are doing. Investing doesn't have to be that complicated. If you're confused by what you're being offered and dissatisfied, I'd focus on a few low-fee funds and ETFs . . . beween 4 and 6 in total.

and

we don't offer a large cap U.S. fund . . . I think a low-cost ETF is a better option.

[brad911]

I liked your guest post on Brad's blog...

He's not the only one who's now famous. Seems Reuters liked your commentary

[George$]

Some more good practical common sense from Tom Bradley in this morning's Globe and Mail ...
'It will sell': A tipoff for bad investment products
A bit ....

As the wealth management industry works through this bear market, investment products that promise certainty and limited downside risk are going to be popular. With guaranteed investment certificates (GICs) offering minuscule yields, stock-market-related products with "guaranteed income" and "principal-protection" will be big sellers.

I think that's unfortunate for two reasons. First, we're now in a favourable environment to take more risk, not less. And second, investors give up a lot of return for the fancy features they're buying. Such things as downside protection, tax deferral or arbitrage and convenience come with a price.

My purpose here is to illuminate some of the tradeoffs investors make when they go beyond plain vanilla.

But first some background. I developed an aversion to complex investment products and packaging about 10 years ago. I was at Phillips Hager & North at the time and we had a number of investment bankers come through our offices pitching us on their newest creations. They wanted to work with us because we had a good brand name that would lend credibility to the products. At the sessions I attended, I always asked the same question: "Is this good for the client?" I never once was told that it was. There was some diverting of eye contact, hemming and hawing, and on a couple of occasions, the answer was simply: "It will sell."

[scomac]

Some more good practical common sense from Tom Bradley in this morning's Globe and Mail ...
'It will sell': A tipoff for bad investment products

This may go down as one of the greatest quotes ever for describing structured finance products:

I liken structured products to Viagra. The industry is hooked on them because they stimulate sales. They're a specialty product that should be used by few, but are sold to many. And the buyers get instant gratification, but pay for it in the long run.

[Bylo Selhi]

I liken structured products to Viagra. The industry is hooked on them because they stimulate sales. They're a specialty product that should be used by few, but are sold to many. And the buyers get instant gratification, but pay for it in the long run.

Punning aside (I'm trying to be serious here), for what (or how) do Viagra users "pay for it in the long run", i.e. what's the, um, downside?

P.S. As for "instant gratification" I thought it took at least an hour for Viagra to do its thing (to your thing, i.e. to get up to speed...)

[Taggart]

Some more good practical common sense from Tom Bradley in this morning's Globe and Mail ...
'It will sell': A tipoff for bad investment products
A bit ....

As the wealth management industry works through this bear market, investment products that promise certainty and limited downside risk are going to be popular. With guaranteed investment certificates (GICs) offering minuscule yields, stock-market-related products with "guaranteed income" and "principal-protection" will be big sellers.

I think that's unfortunate for two reasons. First, we're now in a favourable environment to take more risk, not less. And second, investors give up a lot of return for the fancy features they're buying. Such things as downside protection, tax deferral or arbitrage and convenience come with a price.

My purpose here is to illuminate some of the tradeoffs investors make when they go beyond plain vanilla.

But first some background. I developed an aversion to complex investment products and packaging about 10 years ago. I was at Phillips Hager & North at the time and we had a number of investment bankers come through our offices pitching us on their newest creations. They wanted to work with us because we had a good brand name that would lend credibility to the products. At the sessions I attended, I always asked the same question: "Is this good for the client?" I never once was told that it was. There was some diverting of eye contact, hemming and hawing, and on a couple of occasions, the answer was simply: "It will sell."

Yes, I agree George, probably one of the best articles I've read recently. Good to see a pro being upfront and telling it like it is as far as what's going on behind the scenes. Too many on Wall St. and Bay St. pumping "what will sell", not what's good for the client. You can see it here from this morning's Toronto Star:

[url=http://www.thestar.com/Business/article/613918]Harold Geller, an Ottawa lawyer, is working on a case involving the sale of Olympus hedge funds.

Last year, TD Waterhouse Canada was fined $2 million by the Investment Industry Regulatory Organization of Canada and BMO Nesbitt Burns was fined $300,000.

Both firms were found to be selling these high-risk products without ensuring investors could handle the risks.

The parent company, Norshield Asset Management, was forced out of business in 2005.[/url]

[Yoder]

I liken structured products to Viagra. The industry is hooked on them because they stimulate sales. They're a specialty product that should be used by few, but are sold to many. And the buyers get instant gratification, but pay for it in the long run.

Punning aside (I'm trying to be serious here), for what (or how) do Viagra users "pay for it in the long run", i.e. what's the, um, downside?

P.S. As for "instant gratification" I thought it took at least an hour for Viagra to do its thing (to your thing, i.e. to get up to speed...)

Not many downsides really for the average person - but if you take any "nitro" drugs (i.e. nitro spray - people with stable angina), then occasionally you may get a sudden drop and blood pressure - occasionally causing death.

Does the analogy work?

[George$]

New book by Tom Bradley - available free via a 1 MB download.

It's Not Rocket Science

[Norbert Schlenker]

Thanks for the pointer, George. Lots of interesting reading in there.

[deaddog]

Thanks for the pointer, George. Lots of interesting reading in there.

I can see where you would enjoy this as it supports your “buy and hold, can’t time the market” bias.
He does make some good points but I think he contradicts himself several times.
For instance if you can’t time the market why would it make any difference how you went about investing a lump sum?
If you are not at the asset mix you want to be at, why would you ease your way back to the optimum mix? Why not rebalance today and be done with it?

[FinEcon]

Thanks for the pointer, George. Lots of interesting reading in there.

I can see where you would enjoy this as it supports your “buy and hold, can’t time the market” bias.
He does make some good points but I think he contradicts himself several times.
For instance if you can’t time the market why would it make any difference how you went about investing a lump sum?
If you are not at the asset mix you want to be at, why would you ease your way back to the optimum mix? Why not rebalance today and be done with it?

IMO, you have to adjust for the fact he has to talk his book and is using a nice little psychological play, even the firm's name conatins priming for operant conditioning towards a long term DCA MF strategy. Anyhooo, a fund managers customers are predominantly, if not completely, the 'piggy bank' investing type so I think you have to claim market timing is non advisible, and then do exactly the opposite within the fund (such as overweight beaten up stalwarts such as MFC). I don't know if Bradley does that but that is what I would do.

[George$]

Some more readings from Bradley / Steadyhand

Steadyhand Balanced Income Portfolio - A Performance Assessment - As of December 31, 2010 -12 page pdf file

How Is My Portfolio Doing ... - And What Should I Do About it? - A Framework for Assessing Investment Performance - January 2011 - 20 page pdf file


Added later
Being a hard core do-it-yourselfer at this stage of my life I don't have any funds with Steadyhand --
but clicking around their website, I found the page on fees interesting
Their basic fees are low and then there is the fee reduction program for size and time.

[randomwalker]

While I enjoy reading Mr Bradley's Globe and Mail column and appreciate the fees for his Steady Hand funds are relatively low the bottom line is that according to Globefund.com the three managed equity funds are failing to out peform their benchmark index

http://www.theglobeandmail.com/globe-in ... e_type=ROB

http://www.theglobeandmail.com/globe-in ... e_type=ROB

http://www.theglobeandmail.com/globe-in ... e_type=ROB

[George$]

.... the bottom line is that according to Globefund.com the three managed equity funds are failing to out peform their benchmark index

http://www.theglobeandmail.com/globe-in ... e_type=ROB

I would add that with only three years of data that "failing" is not appropriate without further digging into the cause for the numbers. Given the standard deviation on returns it could be that they are on the right track for very good results eventually but have hit a temporary negative patch for their method. I don't know if that is the case but it is possible. I tend to only pay seriou attention to returns for five years and longer - unless I know the reasons.

[ThinkDividends]

.... the bottom line is that according to Globefund.com the three managed equity funds are failing to out peform their benchmark index

I would add that with only three years of data that "failing" is not appropriate without further digging into the cause for the numbers.

Example: The benchmark that GlobeFund uses for the Steadyhand Equity Fund is the TSX, but the Fund has been approx 60% Canadian and 40% Foreign since inception. Poor benchmark selection can lead to comparisons that aren't valid.

[randomwalker]

.... the bottom line is that according to Globefund.com the three managed equity funds are failing to out peform their benchmark index

I would add that with only three years of data that "failing" is not appropriate without further digging into the cause for the numbers.

Example: The benchmark that GlobeFund uses for the Steadyhand Equity Fund is the TSX, but the Fund has been approx 60% Canadian and 40% Foreign since inception. Poor benchmark selection can lead to comparisons that aren't valid.

Point taken. I would wonder then how an investor in this particular fund can measure performance and know if they are getting what they are paying for as such an asset allocation conviently muddies the water.

[randomwalker]

.... the bottom line is that according to Globefund.com the three managed equity funds are failing to out peform their benchmark index

http://www.theglobeandmail.com/globe-in ... e_type=ROB

I would add that with only three years of data that "failing" is not appropriate without further digging into the cause for the numbers. Given the standard deviation on returns it could be that they are on the right track for very good results eventually but have hit a temporary negative patch for their method. I don't know if that is the case but it is possible. I tend to only pay seriou attention to returns for five years and longer - unless I know the reasons.

As is often said in the fund business "past performance is no guarantee of future returns" and yes they may be on the "right track for very good results eventually" but historical evidence would suggest that the longer the time period the less likely a given fund will end up ahead of its benchmark index.

[Peculiar_Investor]

Tom's blog posting on Aug. 10th, What Now? Part II - Steadyhand Investment Funds

The steps recommended may be the first of many. We don’t know how the markets will play out from here. (Repeat: We don’t know what the markets are going to do in the short term). We do know, however, that bonds will provide a modest return going forward based on current yields. We also know that stock valuations are attractive again (the S&P 500 is trading at 11-12 times earnings, which is well below the long-term average of 14-16). Further, investor sentiment has swung decisively to the FEAR side of the behavioral spectrum, which means it’s time to pay special heed to Warren Buffett’s words:

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Safety is now expensive and risk is on sale.