Performance Perspectives Blog

DON’T ONLY “show me the money”

by | Oct 24, 2013

A memorable line from the Tom Cruise/Cuba Gooding movie, Jerry Macguire, is “show me the money,” uttered multiple times by Gooding. As a result, it has become a part of our society’s broader lexicon.

This reinforces the point that we occasionally look more at the money than we ought to, as I pointed out in my post about Warren Buffett’s post 2008 success.

I visited an asset manager’s website recently and found that they declared the following (and I am paraphrasing a bit): we turned $1 million into roughly $20 million over the past 29 years.

Impressive, right? Wow! To turn $1 million into $20?

Although I don’t have the exact dates, I estimated that the annualized return was 9.89 percent, which also may sound impressive. This was an equity strategy, so let’s see how the S&P 500 did. I called  upon my friend, Steve Campisi, CFA, who reported it was 10.10 percent! This firm’s return isn’t bad, but it isn’t what the index did. Again, perhaps with some adjustments to the dates we may see that the manager did better. But using only dollars and not showing a benchmark is, in my view, a “no no.”

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