Shocked, the government asked for a review of the fund’s active-management approach by Mercer, a consultancy, and for a report by three business-school academics—Andrew Ang, William Goetzmann and Stephen Schaefer from Columbia, Yale and London respectively. The three professors found that for all their stock-picking and do-gooding, the fund’s managers could just as well have thrown darts at a board. Taking the crash into account, the oil fund’s performance was essentially indistinguishable from that of a passively managed index fund. “The evidence points to the fact that over time, managers do not provide extra profits,” says Espen Sirnes of the University of Tromso.


SHOCKED!

BetFAIR share jump up before end of day, so down only 8.5p each today.

Still mean top 4 in list lose £1m each today.  Very expensive day!

Edward Wray  11,472,024
Softbank      11,033,109
Andrew Black  10,898,390
Le Peine SA   9,769,722
SBI holdings   7,274,577
Richard Koch    6,592,238   (80/20 rule books Koch)
Fidelity Inv    6,539,781
Balderton Cap    4,227,170

Firing staff?  Why do you think Betfair want firing staff?  Big bosses at Betfair just got big bonuses! :-)

http://www.guardian.co.uk/business/2011/jul/25/betfair-bosses-huge-pay-increases

"Soon-to-be-former chief executive David Yu gets 125% rise in total package, while finance director Stephen Morana enjoys 445% boost"

Good news for us that Betfair still do good job.  Share price is not what matters.  If Big Betfair Bosses make big money, must be good news because Betfair is making good targets success.

Who care about share price?  If city bigboys lose, ha!  They are all bad bankers people anyway.  BETFAIR are do right thing now - they should pay big money to staff and ignore share price.

pmbets you arnt right

BetFAIR make big peoples pay FAIR share.  It helps everyone rich have to pay FAIR share.  BetFAIR help customers by stopping greedy big peoples winning so it is easier for everyone else!!!  Why you not understand!?  It is ok to say THANKYOU to good BetFAIR bosses by giving 445% salary increase.  BetFAIR are still BEST bookie, so no stopping for long time.

Who care about share price?  If city bigboys lose, ha!  They are all bad bankers people anyway.  BETFAIR are do right thing now - they should pay big money to staff and ignore share price.

   that not the way the world works...Plus, betfair have to many staff

Viva
What's Malkiel go to do with the share price analytical or corporate finance skills of the amateur stock pickers, but professional gamblers, on here ?
Hey the share price right now is obviously reflecting all the sentiment out there both specifically for the stock and generally for the market, but that's an entirely different matter to saying I told you so in exact terms when the float occurred.

Oh wait a minute I think I might in fact be getting you rather subtle post after all Viva.
Are you implying that you think that the dramatic downward spiral in the BF share price is largely reflective of widespread growing customer dissatisfaction both with recent BF pricing changes, and with continuing technical glitches occurring at inopportune times ?.
If so, that is a valid and relevant point.
Though I doubt that the "smart money " in the city  is that much involved in a stock like BF tbh.

no, I'm making the far more simple point that professional investors historically underperform the market.

in other words that your "professional investment community" as a class do worse than the dart-throwing blindfold monkey.

The only recent rallying of the share price was actually the day of the pc2 charge introduction so that dispels any link to the downward trend that has been on a gradual decline since the flotation.

Lot of complex factors involved with market support in a share exchange.
Betfair.l price would of been much better if the glitches in the upgrading of systems hadn't
caused so much downtime of the system, perhaps some of the staff changes were then due to this
and then a knock on effect of more concern in the numbers of staff at the top positions leaving
causing more share price decline.

Also nearly all shares were bought with a cant sell for 180 days condition on them, the persons having bought those shares then have been steadily selling on the basis of continual no-confidence
of the price rising in the near to mid future!

Lori
And what is the exact comparative result ?.
What is your compound annual growth in savings been over the past 20 years ?.
No fibs please.

That's right viva.

A dart throwing monkey can adequately perform the task of an average fund manager, but it can't perform surgery, fly a plane or design a building.

It's hard to see how it could be untrue that the vast majority of the investment community is completely superfluous despite being very handsomely rewarded.

A lot of smart people are being sucked into lucrative careers that add very little value to society. I know that sounds a bit rich coming from a professional gambler, but most of these guys are effectively professional gamblers too. Except they don't know how to make money as investors at all.

Look at it this way, the index return is what you effectively get 'for free' by doing nothing (minus some small fees). If you as a money manager choose to deviate from the index, you are gambling that you can beat it. The concept is so simple. Of course indexing goes against the self interest of active money managers, and brokers that receive fees and hedge funds that do dodgy deals. As indexing gains in popularity that is going to lead to new problems of its own, but I don't think that will happen for some time.

When you get an actuary to set investment return assumptions for pension funds at 9%+ things start to unravel. Deliberate obfuscation and extreme naïveté cause lots of problems.

The parable in this article explains the principles nicely.
http://money.cnn.com/2006/03/05/news/newsmakers/buffett_fortune/index.htm

brilliant post investor2

Investor
It is true that there is a lot of dead wood in the finance advisory industry, just like in any.
But those that are good are very good, and vice versa.
Just like in gambling eh ?
I know from personal experience that I wouldn't have a cat's chance in hell of beating the returns my advisors have gotten me over the past 20 -30 years.
Kept me out of all sort of trouble tbh.

fair distinction fafh

I wouldn't ask the average fund manager whats going to be profitable in a race, ether sports or share market lol[;)]

"its tough at the top"

I will say one thing that makes very logical sense, when applying a change to any business policy,infra-structure change or upgrading the system , each act of change carries a certain weight of risk. If you don't space out your changes in safe periods of time then the weight of risk and inter-relational effects can become a exponential strain on management, cash flow, company image, etc.

perhaps betfair have applied to many changes to quickly?

I believe that to be a total myth Viva.

------------

believe what you want froggy. but that's simply true, and has held true for many decades.

and even the funds which appear to outperform trend back towards the mean with time.

probably a very few, primarily by taking advantage of the idiocy of the others.

buffett springs to mind. does well by doing little and waiting for others to make idiots of themselves in herd mode.

certainly not an argument in their favour as a class.