One of the new phenomena of recent years was the appearance of the cult of performance in the management of investment funds and even of many trust funds . We must start this section with the important disclaimer that it does not apply to the large majority of well established funds , but only to a relatively small section of the industry which has attracted a disproportionate amount of attention .
The story is simple enough . Some of those in charge set out to get much better than average results . They succeeded in doing this for a while , garnering considerable publicity and additional funds to manage . The aim was legitimate enough ; unfortunately it appears that , in the context of investing really sizable funds , the aim cannot be accomplished without incurring sizable risks and in a comparatively short time the risks came home to roost .
The definition of sound investment was a stock that was likely to have a good rise in the market in the next few months . This led to large commitments in newer ventures at prices completely disproportionate o their assets or recorded earnings . They could be justified only by a combination of naive hope in the future accomplishments of these enterprise with an apparent shrewdness in exploiting the speculative enthusiasms of the uninformed and greedy public .
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