CNBC Caught In Lie About Mutual Funds

DeepFried · May 9, 2007

Quote from Sparohok:

That's funny, according to the prospectus, the fund's goal is to achieve market beating returns over the full business cycle with lower volatility than the S&P 500, by investing in stocks and hedging with options. So far that's precisely what he's accomplished.

As you point out, the fund's own prospectus references the S&P 500 as a benchmark. Hello? Anybody home? And what's your definition of a business cycle? A hundred years? We've already gone from boom to bust to recovery over the life of your fund. What your glorious fund has "precisely accomplished" for the last five years is subpar performance, by it's own standard.

How is all this not clear to you?

Quote from Sparohok:

Whereas you seem to be selecting a benchmark based on one word in the fund's name! That's the kind of attention to detail your clients must love.

Hello? You just quoted the prospectus referencing the S&P 500 and "market beating returns" as benchmarks. Nice "attention to detail," jackass.

Your fund has not even been able to keep up with the S&P 500 for five years running! That is undeniable. Only a rationalizing marketing hack like you would try to put a positive spin on that sad fact.

Quote from Sparohok:

HSGFX underperformed the S&P by 1.2% per year for the last 5 years. However it outperformed by 10.15% per year over the 7 years since inception. By what possible logic can you criticize a fund for slightly subpar 5 year returns while ignoring spectacular 7 year returns?

Perhaps if the investment objectives were to track a benchmark, you could criticize the fund for failing to do so; but in fact the prospectus specifically warns that the fund will not track the S&P 500.

HSGFX - 3 year annualized versus S&P 500: negative 9.41%!....Annualized!!!
HSGFX - 1 year trailing versus S&P 500: negative 15.81%!!!

Are you high?!?! Who could defend this shit?

I love when marketing hacks like you expect people to be greatful for a poor return. There has been serious opportunity cost for the people who have committed their money your crap fund for the last five years and people are supposed to be delighted with that? How old are you?

"How can you ignore the 7 years returns? Mew, mew...." I already explained to you its outperformance was all in the first 2 years when there was hardly any money in the fund. The manager has failed miserably at implementing his strategy ever since. This is quite common. Managers have a great year or two, get a ton of assets in and their performance immediately falls to the mean or worse. "Oh, it'll get better next year, when we're further into the business cycle." Ha! Mean average or worse from here on out, that's the pattern that is clearly established.

Five crap years and the fund's been in existence for 7 years. Let me do the math for you - that means it's been sucking ass over 71% of the time it's been in existence and the overwhelming majority of shareholders (95%? 98%?) have gotten screwed.

Quote from Sparohok:

Sounds like a good candidate for a tax sheltered account.

Dude, you completely misread your own chart and now you're trying to cover it up by blathering about tax efficiency. And accusing me of bias for good measure. I don't have to be paid by anyone to figure out that you're full of crap.

Martin

Yeah, put your pig of a fund in a retirement account. That way it doesn't look quite as bad against a basic taxable index. I have a better idea. Get the funds performance out of the bottom decile!

The chart, distributions or no, shows the fund lagging. It lags if you add in the distributions. It lags without the distributions. Same subpar performance, no?

Interesting how you can't bear to acknowledge the Morningstar numbers. Too painful, apparently. What do you do for a living? It can't be trading and it appears you are deeply invested in defending the record of a fund that has been sucking wind for five years. How long have you worked for Hussman Funds? Seriously. You can tell us. Martin.

Only a marketing hack like you could rationalize the crap performance your beloved fund has generated.

Do you or do you not work for Hussman? It's a yes or no question.

Sparohok · May 10, 2007

This is getting silly. I'm going to try to keep this brief.

We've already gone from boom to bust to recovery over the life of your fund.

A period over which "my" fund has vastly outperformed the S&P 500.

Your fund has not even been able to keep up with the S&P 500 for five years running! That is undeniable.

Five crap years and the fund's been in existence for 7 years. Let me do the math for you - that means it's been sucking ass over 71% of the time it's been in existence

Wrong again. HSGFX beat the S&P 500 in 2000-2002 and 2005, 4 out of 7 years. Of course, this is an incredibly dumb way to measure investment performance, but you still got it wrong.

I already explained to you its outperformance was all in the first 2 years when there was hardly any money in the fund.

That was also a bear market, which is exactly when long-short funds are expected to outperform. Whereas you are blatantly cherrypicking a trough-to-peak time period which is the worst case scenario for a long-short fund.

it appears you are deeply invested in defending the record of a fund that has been sucking wind for five years.

No more deeply invested than you are in bashing it. The only reason I'm even discussing this is to call you on your bullshit.

For the record I have no affiliation with John Hussman or the Hussman Funds.

Martin

Cutten · May 10, 2007

Quote from DeepFried:

Hussman Strategic Growth Fund
Annualized 3 year return = 4.11%

S&P 500
Annualized 3 year return = 10.06%

What's wrong with this picture?

John Hussman is a smart guy. The "smart" analysis is not always the best analysis.

Another point is that he is using a linear measure - mutual fund % cash - to try to predict stockmarket moves. In my experience, using linear measures is useless for price prediction over any time period. People were calling stocks overvalued from 1995-2000 based on valuations, S&P market cap as % of GDP etc. That didn't stop them being wrong for 5 years in a row during the biggest rally in decades. Hussman's % cash measure would have got you out of stocks 2 years ago.

Anyone who uses linear measures to try to call tops or bottoms in the market is making a beginner's mistake.

Sparohok · May 10, 2007

Quote from Cutten:

Anyone who uses linear measures to try to call tops or bottoms in the market is making a beginner's mistake.

Be fair Cutten, it was CNBC trying to use that measure to predict the market. Hussman was just using it as an example of a vapid bullish argument from the "carnival-like atmosphere on CNBC."

Martin

DeepFried · May 10, 2007

Quote from Cutten:

Another point is that he is using a linear measure - mutual fund % cash - to try to predict stockmarket moves. In my experience, using linear measures is useless for price prediction over any time period. People were calling stocks overvalued from 1995-2000 based on valuations, S&P market cap as % of GDP etc. That didn't stop them being wrong for 5 years in a row during the biggest rally in decades. Hussman's % cash measure would have got you out of stocks 2 years ago.

Anyone who uses linear measures to try to call tops or bottoms in the market is making a beginner's mistake.

I completely agree. Regarding Hussman not participating in the market the last two years, that is clearly the case regardless of what his investment decisions were based on. Trailing the S&P by over 15% for the last year is not just underperforming, that's the kind of extremely poor performance that comes from making macro bets that are foolish.

DeepFried · May 10, 2007

Quote from Sparohok:

This is getting silly. I'm going to try to keep this brief.

We've already gone from boom to bust to recovery over the life of your fund.

A period over which "my" fund has vastly outperformed the S&P 500.

No comments on the S&P 500 and "market beating returns" named as benchmarks in the prospectus? No, of course not, because you've demonstrated a total inability to face reality.

Hussman's underperformance for the last five years is the millionth example of a new manager being able to achieve high percentage returns with no money and then getting hammered after getting a lot of money in. I've seen this happen many, many times.

In the long run, we're all dead, i.e., no one in their right mind would be satisfied with the performance of your beloved fund for the last five years, no matter what the rationalization.

Quote from Sparohok:

Your fund has not even been able to keep up with the S&P 500 for five years running! That is undeniable.

Five crap years and the fund's been in existence for 7 years. Let me do the math for you - that means it's been sucking ass over 71% of the time it's been in existence

Wrong again. HSGFX beat the S&P 500 in 2000-2002 and 2005, 4 out of 7 years. Of course, this is an incredibly dumb way to measure investment performance, but you still got it wrong.

Good Lord, why don't you pick individual quarters, too? How about months? You might be able to get the numbers up. For the 87th time, I quoted Morningstars net performance numbers (pre-tax, of course). According to his own benchmark, your boy has been getting his ass kicked for five years running and the three year and one year numbers are ridiculously bad.

Quote from Sparohok:

I already explained to you its outperformance was all in the first 2 years when there was hardly any money in the fund.

That was also a bear market, which is exactly when long-short funds are expected to outperform. Whereas you are blatantly cherrypicking a trough-to-peak time period which is the worst case scenario for a long-short fund.

I've heard more marketing spin over the last 20 years than you could imagine. Hell, I've spoken my share of marketing spin. "There was a bull market, mew, mew...." Well, boo-fucking-hoo. Whatever the hedge, whatever the "clever" strategy, the opportunity cost of being in your insanely tax inefficient fund is too high. There are a million different ways to hedge volatility and risk out of a portfolio and your fund is far too much of a dog to do that efficiently.

You and your boy Hussman are all excuses and no performance.

Quote from Sparohok:

it appears you are deeply invested in defending the record of a fund that has been sucking wind for five years.

No more deeply invested than you are in bashing it. The only reason I'm even discussing this is to call you on your bullshit.

For the record I have no affiliation with John Hussman or the Hussman Funds.

Martin

You are more full of shit than probably anyone on this board, and that's really saying something. You are massively delusional and unable to face facts or reality. Get some help.

Sparohok · May 10, 2007

Good Lord, why don't you pick individual quarters, too? How about months?

Oh please. You're the one who said HSGFX got beat "5 years running." "5 crap years [...] 71% of the time it's been in existence." Wrong again! Hmm, I see a pattern here.

This is your bullshit, not mine. I'm just regretting that I ever stepped in it, now I'm stuck with the stink.

Whatever the hedge, whatever the "clever" strategy, the opportunity cost of being in your insanely tax inefficient fund is too high.

We shall see. Deep in the next bear market you come back and tell me all about opportunity cost. Till then, I'm done with you.

Martin

DeepFried · May 10, 2007

Quote from Sparohok:

Good Lord, why don't you pick individual quarters, too? How about months?

Oh please. You're the one who said HSGFX got beat "5 years running." "5 crap years [...] 71% of the time it's been in existence." Wrong again! Hmm, I see a pattern here.

This is your bullshit, not mine. I'm just regretting that I ever stepped in it, now I'm stuck with the stink.

Whatever the hedge, whatever the "clever" strategy, the opportunity cost of being in your insanely tax inefficient fund is too high.

We shall see. Deep in the next bear market you come back and tell me all about opportunity cost. Till then, I'm done with you.

Martin

That bullshit you're rolling in is your own. You're dead wrong, your fund is a pig by every measure and you can't even begin to admit it.

Yeah, check back here in 5 or 10 years. I'm sure you'll be just as brain-dead and delusional.

ByLoSellHi · May 10, 2007

Guys, let's be civil to each other, even if we disagree.

The reason I posted this is because of the issue regarding to what degree mutual funds are invested in the equity markets now versus the past.

I didn't mean to create a discussion or argument over the merits of Hussman's approaches or investment strategy.

Someone said the chart he had posted regarding the % of cash mutual funds are carrying on hand versus what they have invested is erroneous - I have yet to see any contrary data.

Thanks.

Sparohok · Mar 16, 2008

Hey DeepFried,

It's been about a year. HSGFX is up 4.43% since we talked last. S&P 500 down 5.33%. Hope your clients are doing OK. Too bad they weren't investing in this "pig" fund that "nobody in their right mind would be satisfied with."

Martin