Quote from Cutten:
I have a question. Why is Cohen paid anything at all, let alone the high amount she receives? Surely there is a high supply of informed market strategist wannabes who are slightly more on the ball than she is, and who would be willing to work for much lower wages? She has been wrong so badly and so often, that I struggle to believe that Goldman could not save say 9 million and improve their quality of service by hiring a more intelligent strategist.
What's going on here, is it something we don't understand? Is Cohen just the institutional equivalent of Oliver Velez? Are there really that many suckers who choose to use Goldman because Abby works for them? She doesn't exactly help their credibility.
It's the human nature for people to want to have to believe that there are bright people residing in lofty offices in the financial capitals of the world who "must" have some ability, to whatever degree, to predict the future price action of equity markets.
They just "must,' even though history clearly establishes, as Benjamin Graham so eloquently and succinctly stated, that the ONLY thing that anyone, no matter how much education or how bright or how on top of current events they are, can know is that future prices of equities "will fluctuate."
Some people like to point out that the editorial panel at the Wall Street Journal do better, on average, picking 'winning stock' by throwing darts at the ticker section of their paper, taped to the wall, each year, than literally nearly every analyst out there.
Abby Joesph Cohen and those like her get paid what she does because of who she knows, where she works, and because of a tragic, inherently flawed and desperate desire by individuals to want to believe that there are people who can see the future.
The marketing, political power and orgiastic nepotism of Wall Street, feeds the machine that leads to the fees.
Give almost anyone here access to managing the money of a few pension funds, with maybe a couple billion dollars under their control, and with conservative and minimally rational investing methods, most will at least match the gains of the overall indexes, before fees. That is a very sad reality (I believe) that demonstrates just how bad of a job the professional money management industry does - because the majority of these people fail to even match the performance of the indexes, which is why Vanguard came to be.
The following is just my opinion, but I believe that Bogle has proven that what I am parroting is factually true. The empirical data supports my claims.
I just finished reading 'Unconventional Success: A Fundamental Approach to Personal Investment' by David F. Swenson, who manages the Yale Endowment Fund. It is an excellent book and only reinforces my opinions on this matter.
The average investor, with average intelligence, can do much better managing their own money, because the fee structure and management techniques that "professionals" impose on their clients represent a wealth-devouring cancer, that drag down what is already sub-typical performance.
