The Alchemist: The Club

Posted in Money Matters on September 16, 2002

The following is this week’s installment of The Alchemist, a column by Mensan Al Thomas, author of If It Doesn’t Go Up, Don’t Buy It. Click ‘Read More’ below for this week’s article, “The Club.”

The Club

by Al Thomas


Yesterday I received my monthly issue of MONEY magazine. This issue has the
special feature called “The Ultimate Investment Club” that highlights their
picks for the top mutual fund managers. Let’s see how their members made
money for their shareholders.


My readers know that the only thing that counts in my book is
performance and performance means they make money and do NOT lose money so I
went back to preview their record since these experts took over. When you
see the results of this club you will be glad you did not go on any camping
trips with them. Here are six who manage stock mutual funds.


As we go along you must keep in mind that fund managers get paid
for the amount of money they have under management and not on how much they
make for you.


MONEY magazine has given them titles. I will not mention their
names, but will give you the fund along with the stock exchange symbol so
you can look it up on the Internet at www.bigcharts.com.


“The Survivor” who manages Seligman Communications Fund (SCICX)
since it was founded has seen the share price start at $35 and rise to $54
only to fall back to $15 today. He is surviving with your money, but you are
not.


“The Value Master” of Legg Mason Value Trust (LMNVX) sure doesn’t know when the value has run out. Under his tutelage the fund has gone from
$45 to $78 to $43.


“The Maverick” of CGM Capital Development (LOMCX) has been
thrown by his horse. Share price in 1976 started at $10, went to $43 and is
now $18. Tough ride for the shareholders.


Now we come to “The Bargain Hunter” who took over management of
Oakmark Select (OAKMX) in 2000 when the market was at its peak. It was $22
and went up (!) to $37 and is now trading at $32. He is the only winner in
the group. Congratulations.


Another loser is “The Opportunist.” This guy should be getting
his buy recommendations from cab drivers. He could not do any worse for the
Strong Opportunity Fund (SOPVX). It started at $45 and has nothing but a
downward journey to its present $29.


For the Brandywine Fund (BRWIX) we have “The Growth Guru.” The only thing
that grew fat was his wallet off of your money. He took over in 1998 at $45
and it went down to $22 in 1999, then up to $53 and is now $20. Actually he
can only be given credit for the advance from $45 to $53.


In all fairness to these losers I did not include any capital gains or
dividend payouts which during the few good years they had may have been very
good, but probably not good enough to keep you at “even.”


There are all kinds of clubs you can join, but obviously this is not one for
you. When you see advertising for various mutual funds or how wonderful some
fund manager is please look beyond the hype and check out the performance.


Copyright Albert W. Thomas. All rights reserved. Author of “If It Doesn’t Go Up, Don’t Buy It!” www.mutualfundmagic.com. Comments to al@mutualfundmagic.com.