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The Secret Life of a Portfolio Manager

July 4, 2012

How is it that the mutual fund, hedge fund, and so forth, investment industry has convinced us that we need to pay administration costs, annual fees and possibly load fees in order to invest our money for us?

Other sports players – and we could think of  “investing” as a kind of “sport”, couldn’t we, and it ought to be fun, shouldn’t it – get “signing bonuses” when they sign-up to play, but we get nothing. Not even guarantees of the safety of our capital, with the possible exception of a life insurance company’s segregated funds and, one would hope, certain bond funds or money market funds, although nothing is guaranteed that is not said to be guaranteed.

One could also consider that, in almost all cases, when we give our money to a mutual fund or hedge fund or whatever – possibly last year’s hottest performer – we might get nothing back. After all, we gave it to them and no one is to blame or held accountable for losses because we have signed up for the “risk/reward equation”.

The Risk/Reward Equation

Notwithstanding our good luck or happenstance,
– if we accept the “risk/reward equation” – no risk, no reward – we will lose our money;
– if “caveat emptor” is good enough for us, we will lose our money;
– if “past performance is no guarantee of future performance” is good enough for us, we will lose our money;
– if we like Jeremy Siegel’s book, “Stocks For The Long Run”, McGraw-Hill, NY, 1994, now in its fourth edition, we will lose our money;
– if we give it to our clients, we will lose their money.

And, one must remember, we did have alternatives that are still better than cash, such as Treasury Inflation Protected Securities (TIPS) and Real Return Bonds (RRBs) which at least provide a modest return above inflation and no costs at all – no adminstration costs, no fees and no loads (absent an unexpected need for liquidity, such as our cash, now).

In these Letters, we have often noted that the investment pool is much deeper than the shallow end and that one could demand the possibilities of The Perpetual Bond® from our professional investment advisers.

The Perpetual Bond®

“Alpha-smart with 100% Capital Safety and 100% Liquidity”


With No Fees and No Loads

How can that be too much to ask? Pay for performance and not just performing.


Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”.

Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability.

We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now.

The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”,  ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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