The Game of the Workplace

Whether you’ve been in the game for a while or are just entering the game, there’s some core concepts to truly understand in order to build a career to a place of satisfaction.  Having now been around the block a couple of times i.e. I’m old, I’d like to share a few more workplace truths to tack onto my 2012 piece about Perception Management.

Concept #1:  Your career advancement is not based solely on merit

In other words, just because you may be a high-performer, doesn’t mean you’re going to earn that snazzy title and a solo-office…or a corner office.  WHAT?!  Say it ain’t so!

Maybe you’re the fastest programmer with least bugs and consistent best end-user experience, maybe the top sales person, perhaps the highest performing middle manager, etc., whatever.  And yet, you’re still not getting promoted.  Why is that?  Have you considered your ability to manage-up?

Managing-up is simply managing the relationship with your superiors, in all facets.  This means you have to manage how you are perceived in addition to “Exceeding Expectations” in your performance.

If you’ve worked in any organization long enough, you’ll inevitably encounter upper management or executives and wonder how the heck they got there.  Managing-up is how.  Control the narrative around your career and you at least have a chance at controlling your advancement or stasis.

Combining the ability to positively manage others’ perception of you with your own ability to outperform to expectations is a great way to garner success.  Not the best way, but a great way.


Concept #2:  You catch more flies with honey, and…

It is easier to win by cooperating and complementing your teammates’ skill-sets.  Even if that teammate is a competitor, by working together, you can both achieve more.

Cliche?  I know.  But why do you think this concept is constantly reiterated in sports and in the workplace?  Better to play nice and lift each other up than to look down  your nose, judge, plot, and scheme.  Leave the plotting and scheming to the talentless hacks who solely manage perceptions to cover for their absence of talent.

Concept #3:  Discipline!  Discipline is the key!

I said out-performance and perception management are great but not the best.  Combine those two notions with discipline and there’s the true formula for success.  Proven over and over; not statistically but visually, anecdotally, and through the countless commentaries of the successful.

How many stories have you yourself read about some successful person you admire where they comment on discipline?  It’s also known as the ability to outwork, to consistently apply the process, stay focused, etc.  Whatever you want to call it, discipline is about mental-toughness.  And combining discipline with concepts 1 and 2, my friends, is how you win in business.

Sure, this is a broad generalization.  There is nuance to all concepts, but the core concepts are the truth to success in the workplace.

image.pngNow all that being said, am I some successful, retired-early, self-made millionaire?  No.  I work for a living with the hopes of getting there one day soon.

But I’m just north of 40 years of age and I ignored those three concepts for the bulk of my multiple careers.  It cost me.  I have had a modicum of success and am just young enough to still apply these concepts and hopefully reach my business goals that much faster.

If you’re in your 20’s or 30’s or any age and have somehow come across this post, I implore you to please not ignore these simple lessons shared.  They seem like common sense but we all know how uncommon good sense can be.

If you consistently apply these three concepts in the workplace, then like the great coach Herman Boone says, “…like Novocain.  Just give it time, it always works.”

Fun With Employment Charts

Before we get to the employment chartporn, I want to share a quick note regarding my two previous posts and handicapping football games. I SUCK AT HANDICAPPING NCAA FOOTBALL THIS YEAR! College is usually my bread and butter but for some reason my radar for college handicapping has been turned off and my normally mediocre NFL radar has been fine-tuned into a well-oiled machine. Go figure. Either way, if any readers out there placed college football bets based on my picks, I hope you learned your lesson. As for the show of hubris behind my so-called college football handicapping ability, well you can be sure I learned my own lesson.

The BLS provided it’s September NFP update last Friday and the markets loved all of it. Not loving it so much now, but the overreaction was stunning last week. Unemployment fell below 6% which means America is fully employed! Hooray! Breakout the champagne because everyone that needs a job has a job in America. Hitting the 5% mark makes it true. Remember, when unemployment in the 5% range meant full employment? I think Lady Yellen’s memory is little bit fuzzy. According to a recent report at Bloomberg, “The labor market has yet to fully recover,” Fed Chair Janet Yellen said at a press conference after the FOMC meeting. “There are still too many people who want jobs but can’t find them.”

So everything is awesome, but not? Damn, and here I thought we were in full recovery mode. CPI inflation is tamed FOREVER! Monetary inflation is make-believe. And unemployment reached its magical number, so let the jacking up of rates begin already. Let’s taper the asset purchases by the Fed down to zero and feel some tightening; our economy’s ready!

Alright enough with the snark, if you haven’t already been charted out by the financial blogosphere and other various news sources then I’ll give you your fill. We’ll try to look at the perception and the reality. Bear in mind as you read these charts snipped from various other sites, that they’re all generated off of BLS data. You can go right to the BLS site yourself for verification. There you’ll find all the data tables needed to plug into Excel and create your own graphs. I readily admit that I’m way too lazy for that so enjoy your reblogged content.

The first chart, courtesy of Carpe Diem, shows the 12-month change in NFP over the last decade. Basically, it shows that annual job growth is at a new high since the last peak in 2006.


Of course, this bit of great news coincides with an all-time high in temp hirings. Because nothing says full employment like setting a new record for temporary hires who will soon be unemployed again. Chart is also courtesy of Carpe Diem via FRED.


So this chart obviously speaks to the quality of the jobs being created out there, but you can’t review a new post-recession low in unemployment without reviewing the labor participation rate and its new lows. The next several charts regarding labor participation are all courtesy of the financial conspiracy theorists’ home site, Zero Hedge.


Allow me a quick indulgence here to rant on Josh Brown, The Reformed Broker, as he so unaptly stated in his own post last Friday regarding the NFP, “Losers will crawl out of their coffins and crypts to whine about the labor force participation rate, but no one cares. Think tank economists want things to get worse so they have some firepower for Fox News and MSNBC tonight. The reality is, the economy is growing as expected – slowly but surely – and there’s nothing “wrong” with today’s release. ” What a load of sellout, dickbag nonsense.

I remember when this guy used to offer fairly witty insights into the markets despite his own less than savory pathway into the field of finance. Now he’s so impressed with himself that he has to avoid reality, Krugman-style. I get that he’s now an established best-selling author, Yahoo Finance contributing personality, sometimes TV commentator, and CEO of a wealth management firm, so he’s had to sacrifice some of his original personality for some wealth and fame. No begrudgements here. Many famous and wealthy can be labeled a “sellout” but usually the only people who use that title, do so out of envy and/or disgust at their own lack of success. I assure you that’s not the case here. I’m just appalled at the sack this guy has in calling fellow reporters, bloggers, and media commentators, a “loser” for referring to the facts regarding America’s employment situation. This clown fish has been officially un-favorited at the MarginRich blogroll, because all 8 of my followers are really going to care. Okay, enough about Josh Brown. Wait, one more burn, what’s with the Something About Mary hairstyle?

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Anyways, the percentage of working age Americans in the workforce has reached a 36 year low…but America’s fully employed at 5.9%. Right. A fair percentage of the decline in US unemployment numbers are directly attributed to the decline in the labor participation rate. There are a record 93 million working-age Americans that are not in the labor force. These facts have been reported on ad nauseam, but let’s drill down on the participation rate to the year the Great Recession started.


Many of Josh Brown’s ilk as disregarders of the labor participation rate will simply attribute the declining rate entirely to retiring employees. As I shared almost a year ago, the Philly Fed already tried to officially go down that route but the information just doesn’t conveniently jive. Lo and behold, look what demographic group was the largest gainer of job additions in September.


What do you know? It was the boomers and people in retirement age. Are we to believe that the demographic group of 55 and older is the backbone of America’s economic and employment recovery? Lest one think that this is an aberration or a one-off event for the month of September, there’s a chart for that, too. This trend has really picked up speed since the Great Recession.


Sorry millennials. You’re $80-Gs in debt for an education that got you a temp job where you report to a manager, aged 55 – 69, who has just been newly hired. Life’s tough. The youngest boomers and gen x don’t exactly have it a whole lot easier, but at least they’re entrenched in their jobs held from the Great Recession, where they’re just forced to complete double the work for the promise of a raise that hasn’t materialized in 6 years.

Since America is fully employed now, there should be much more income available for consumption to really begin to juice the economy. Especially since the tapering is near completion and we’re on the doorstep of the ever-so-important holiday shopping season. Unfortunately, we’ve hit a little roadblock in that department too as wages have been stagnating for some time now. Have a look at whose wages are actually growing, courtesy of BofA.


Unfortunately, only the most educated are consistently seeing growth in income generation. However, this statistic rides shotgun with the fact that a college degree is continuing to lose its edge as a value-adding tool for a new entrant into the workforce. Additionally, most of the middle-class, the back bone of the consuming public, fall into the educational categories below Master’s degree. Thus, negative comps at Wal-Mart, McDonalds, etc.

Demand is declining as exhibited by declining top-line revenues. We’re seeing more and more negative YoY comparable sales numbers across multiple industries. Earnings growth going forward probably won’t be driven by consumption so much as by share repurchases. I don’t want to be the constant doom and gloomer in the corner of the room brooding by myself, but if everything is so damn rosy why doesn’t it feel that way to the average American? You can’t just read the beige books, NFP reports, ISM reports, PCE and CPI price indexes, and all the other governmental reports while continuing to turn a blind eye to the genuine outlook here in the US.

Couple all this information with current stock market behavior and there’s reason to maintain a cautious stance. Last month I reported on the divergences occurring within the equity markets, offering that it was a time to take caution and build cash levels. I hope readers listened. Oil is tanking and it will generate a lot of financial buzz as it allows investors a much better entry point for previously missed opportunities. It will also provide a pseudo-subsidy to the American consumer. However, as some very important countries in the world rely on a higher price of oil, I can see where geopolitical conflict intensifies with Middle-Eastern concerns as well as Russia.

The currency markets are creating set-ups to coincide with the previously described events and that may lead to additional downside action in equity markets but possibly upside action in the commodity markets(except oil), specifically the precious metals. Please observe the following chart, courtesy of Kimble.


The currencies are important to keep watch on as they can be leading indicators for other asset classes. I hope you’ve built some cash levels to take advantage of the opportunities being created in several asset categories, because if you think this current sell-off is THE BIG ONE, you’re mistaken. We may get a very scary drawdown, however markets of all shape and size will see new highs going into next year and investors will want to be positioned to take advantage of the major momentum in asset prices that builds up to a legitimate bear-change in trend.

Oil and gas have sold off indiscriminately. If you felt like you were left behind in those areas, then be keeping a close eye. I wouldn’t be in a rush to start grabbing shares though, as the oil price may ride lower and for a longer time period than you’d think likely. Additionally, rig counts will take time to level off so drillers could remain depressed as well. We’ll see a bounce in driller names, but we’ll probably also see a resumption of their downtrend. Cash, a watchlist, and patience are the best friends of the prudent investor shopping for value. In the meantime, if you’re looking for a job then stop reading this damn article and go hit the Manpower agency to get a temp job you can call your own.

A Few Sample ETF Portfolios to Watch

Well 2014 has arrived with a tepid start and already the correction bells are ringing around the financial web. I’m as guilty as the next blogger of trying to front-run corrective moves in the greater markets, but in my experience, it’s rare to see a pack of pundits predicting market direction with collective accuracy. Sure, equities look a touch expensive here depending on which valuation-gauges you’re utilizing, but financial writers around the web(myself included) have been calling for corrections since the last one of note in June. Additionally, I’ve read plenty of analysts who state there’s still value at these stock prices.

Let’s consult the tea leaves and see what they communicate:


As the squiggle shows, if this weak start to the year is the genuine beginning to a sizeable(but perfectly healthy) correction of at least 8%, then there will be plenty of time to get properly positioned to take advantage going in and coming out. Notice at the blue circles above, how long the market takes to actually set-up the real dip that shakes things up.

Last year was the Year of the Passive ETF. The year 2013 caught the hedge fund industry with its pants down and the rich, whose funds were locked into 2&20, drastically under-performed the plain old, vanilla ETF of SPY. The S&P 500 tracker returned 29% last year, beating it’s very long term CAGR by a very healthy premium. In a mad trading world of short-term thinking and instant gratification, the long-term view of the Bogleheads destroyed churning traders on an absolute basis. Will 2014 be more of the same? I wouldn’t bet on it, but the consensus view out there seems to be that 2014 will be another good year…just not as good as 2013. Some more consensus thinking has been, “We’ll probably finish the year with the stock markets up about 14% to 16% compared to the prior year’s 30%’s for some indices.”

So in the spirit of following what worked last year while trying to include a touch of the contrarian and a dash of new trends, I’ve put together an ETF portfolio that I’d like to track in 2014. Because chasing always works! As always, this is not an investment recommendation. Since buy & hold was an elite strategy for 2013, and really since 2009 apparently, let’s see if 2014 continues to favor buy & hold with good fortune.

We’ll title the portfolio, Look Back and Ahead. Here’s a snapshot of its construction using


Let it be acknowledged that this portfolio is only partially constructed using a rear-view mirror, and that investing with one’s view on the rear-view mirror is generally not going to lead to short-term success. The Look Back & Ahead (“LB&A”) portfolio was constructed for short-term results in 2014 only and is looking to utilize prevailing trends and combine them with some of the strategies that had a rough 2013. Eight of the chosen ETF’s follow trends established in 2013. These are Japan(DXJ), Junk Bonds(HYG), Biotech(IBB), Russell 2000(IWM), Tech(QQQ), Share buy-backs and dividends in earnings growth(SYLD), Consumer Discretionary(VCR), and Health Care(VHT).

The remaining 4 ETF’s of LB&A are the contrarian plays that could bounce back in 2014. Some of the possible reasons behind any potential bounce-backs are: extended negative sentiment ready for a turn, value at these prices, or hot money moves in together creating a new trend. The 4 trends waiting for a potential 2014 rally off some lows are: Emerging Markets(DEM), Europe(FEZ), Gold(GLD), and Muni-bonds(TFI).

You might be thinking muni’s and saying to yourself, “Really?” They’ve had a tough year for sure. Certainly one of the worst performing years in the sector over the last 20. Barclays produced a chart of performance for the past couple of decades. It shows that after a down year, the sector tends to rally quite nicely. Will this time be different?


Since the S&P 500 index performed so well, we’ll track LB&A against the SPY for the year. But wait, there’s more. If I think that LB&A may be able to outperform the market by riding some established sector trends and a handful of potential counter trends, then why not leverage up. Well I have a portfolio for that too, that allows for a 2 or 3 times leveraged move in each of the sectors of LB&A without taking on margin risk into your investment account. Observe:


Unfortunately, ETFreplay subscriptions do not provide access to the entire universe of ETF’s. As they state on their website, “As of 2010, less than 500 ETFs have provided >98% of the trading ETF/ETN volume in the U.S. market.” Which means that due to a lack of liquidity and volume, six of the levered plays are not in the ETFreplay database. As such, I am unable to easily save and track the portfolio with their site’s tools. I’ll just save it on another site’s portfolio tools and drum up some charts in Excel for performance tracking purposes. And in the continued spirit of simple benchmarking against the S&P 500, we’ll use SSO(2x levered S&P ETF) as our comparison benchmark.

Just for ha-ha’s, we’ll track another portfolio in 2014 of purely contrarian plays. Construction of this portfolio should be obvious to most, but have a look at its make-up. It’s titled Contrarian New Year.


Obviously, the BRI of BRIC had a tough year so we’re allocating there for total country exposure. I also included Singapore but left out Turkey. With the ongoing corruption scandal in Erdogan’s government, there’s obviously a whole lot more than sentiment going on there. We’ll just see how that situation plays out and how it affects investor sentiment towards the Turkey ETF later in the year. Commodities were utterly atrocious, so I included DBC and GUNR but also wanted to concentrate performance for some mean reversion specifically in coffee, corn, aluminum, coal, and silver. Gold miners were…well you know the story by now. Utilities was one of the worst performing sectors in the US along with TIPS, as nobody expects inflation and everybody wants to buy growth. We’ll see if inflation starts to tick upward and relative value attracts some players back into the utility space in 2014.

Just like muni bonds up above, you may be thinking that the gold miners prove I’m a glutton for punishment. That may very well be, but risk can always be managed, and if the underlying product has a bounce-back year then the producers may see a little pop in performance. Especially if the metal can catch a bid sufficiently past most of the producers’ all-in-sustaining costs. Observe the following chart of the XAU’s performance over the last 30 years, courtesy of US Global investors via Bloomberg. It says to me that miners have a potential low risk/high reward set-up. Believe me, any time the word gold comes out of my mouth, I want to shoot myself in the face.


Remember, that these sample ETF portfolios are not investment recommendations and I reserve the right to allocate my own funds as I see fit into or out of any of the fore mentioned investment products. If you’re interested in some of the more professional portfolio metrics and want backtest results, Sharpe ratios, alpha and beta, correlations, etc., then too bad. Go look it up yourself. The name of the game in 2013 was absolute performance and so that is what we are measuring in 2014 with these ETF experiments.

And that ladies and gentlemen, is about all there is to basic asset management. Here’s the basic formula: Follow some prevailing trends to cover career risk + buy some contrarian plays based on quantitative models to cover career risk = hopefully benchmark beating results…and winning the grand prize of more AUM, which inevitably leads to diminishing performance. Obviously, I’m highly generalizing here. Asset management in any shape or form is usually performed by very well educated individuals or groups utilizing highly sophisticated quantitative or fundamental models drawn from a wealth of experience and knowledge. I don’t mean to belittle that nor do I begrudge anybody able to obtain a position managing assets. At the higher levels it is a very, very lucrative career that can build high-quality, long-lasting relationships.

For now, I’ll continue to trade my accounts, spend time with my family, post to my blog, and pursue interests. Am I going to be nominated for fund manager of the year for my efforts? Certainly not; but I just may have a shot at Dad’o the Year.

Now this wouldn’t be a real article, if I didn’t over-chart the reader. So with that, I’ll bid you adieu with a few charts to provide entertainment and food for thought. Charts are courtesy of some of the financial blogosphere’s most respected, TRB, Jesse, and Kimble.

The January Effect:clip_image010

The Recovery:clip_image012

Is the financial system stressed?:clip_image014

Below is the final “Portfolio Update” posted on 1/4/2015:

Here’s where I’ll maintain the updates to the ETF portfolios that I outlined in the January 2014 post titled, A Few Sample ETF Portfolios to Watch. If you haven’t read it and are curious as to the rhyme and reason behind these experimental portfolios, then please read the post for a full explanation. The portfolios all started with a “play-money” value of $100K. We’ll see how “buy & hold” closes out 2014. CLICK ON EACH TO ENLARGE.

Update 1/4/2015:  Say goodbye to 2014, the year of nothing specifically working except holding everything. Obviously, the adroit speculator was able to generate income in various and specific asset classes. However, the casual investor trying to pick stocks or even the majority of hedge fund managers were both trounced again by a levered ETF of the S&P 500. So much for trying to follow the trend while also also trying to be contrarian. That little thought experiment crashed and burned. I have a strong suspicion that indexing ain’t gonna be as easy as it’s been the last 2 years but who knows. I’ll leave these results up for the rest of the month and then bid adieu to this specific page regarding the 2014 experimental portfolios. Maybe I’ll come up with something else to add to the site, but at the rate I’ve been posting, don’t get your hopes up. Good luck in 2015, muppets!

1. Look Back & Ahead as of 12/31/2014:Look Back & Ahead (2014 Year End)

2. S&P 500 as of 11/18/2014:
S&P 500 (2014 Year End)

3. Levered Look Back & Ahead as of 12/31/2014:Levered Look Back & Ahead (2014 Year End)

4. S&P 500 2x Levered as of 12/31/2014:Ultra S&P 500 (2014 Year End)

5. Contrarian New Year as of 12/31/2014:

Contrarian New Year (2014 Year End)

Perception Management

The number one skillset to possess, in a world where true merit, diligence, ethics (work and moral), and pure results are forgotten notions, is the ability to influence how others perceive you. I dare you to dispute it. Perception management also goes by:


“Brown nosing”

“Boot shining”

The list goes on, but in your own endeavors, I would venture to say that you can instantly recall a specific hack(s) you used to work with or for. How did they obtain their position? Why do they keep advancing without truly accomplishing anything? How come they haven’t been demoted or fired? It can be quite maddening for the honest, ambitious employee who truly believes in a meritorious work environment. It’s not a concept that is exactly taught in business schools. No, schools teach about theory and principle; “And with a little hard work and diligent application of the theories and principles you have learned, you too will be successful.” Ha! Tell that to today’s early-career Millennials at the bottom rungs or the kids just exiting college and don’t see the most exciting prospects.

The name of the game is “you gotta get along to get along.” And that doesn’t just apply to the world of politics. It applies to any and all hierarchies. If you want to successfully rise within a hierarchy then you better master the concept of perception management. Or you can keep wondering why Johnny-Windbag keeps moving up the ranks even after sleeping with the wife of one of his subordinates and telling his vegan boss that he too is a vegan, when Johnny really spends his weekends clubbing baby rabbits and cooking them.

Universities don’t teach you how to treat your boss to drinks and weasel into their inner circle. Nor do they teach you how to effectively play all sides of superiors, subordinates, and colleagues without any conscious or semblance of empathy. In a business environment that appears to be filling with more and more successful psychopaths, sociopaths, and narcissists; maybe perception management should be added to the curriculums of business schools. Imagine?

You finally are accepted to Wharton and you are required to write a thesis on how to take credit for the specific work of a colleague while discrediting your boss to her boss so that she may be transferred departments. If it worked for Johnny-Windbag, who only has a lowly state degree, then why not get that B-school Master’s in Perception Management? Because eventually, if you don’t learn the game, you will plateau.

I really started to explore the notions of sociopathy, psychopathy, and narcissism in the work place only after experiencing it around every corner in one of my previous careers. One of the books I recommend, Snakes in Suits by Babiak and Hare, takes the reader through the mindset of a typical business sociopath and the opposing honest, ambitious hard worker. Back in 2011, Jesse from the Café Americain blog, wrote some great pieces touching on the mental sickness. You can read a sort of compendium of Jesse’s pieces on the subject matter here. I then started to evaluate, unprofessionally of course, former colleagues and superiors from my first career. The narcissism and psychopathy ran rampant in that culture and continues to this day.

Most psychopaths or sociopaths are not cold blooded killers or hard core criminals. In the workplace they’re just people inordinately motivated by a reward system and will generally execute any strategy they see fit to obtain rewards, despite any negative impact to fellow human beings. These people exist in your life right now…professionally and personally. They can sometimes be difficult to sniff out because the business-minded ones tend to be somewhat gregarious and skilled conversationalists. They can be genuine nice guys/gals to most people’s face and then stab them in the back for personal benefit at the opportune moment. The ability to dazzle you with their poppycock and malarkey allows them to sink their claws into you before deciding how best to proceed in the relationship. Always be on the lookout for these snakes.

To be fair, managing perceptions is a standard skillset that all persons operating within a corporation, partnership, or any hierarchy should possess. Wanting to put your best foot forward by having others perceive you well is a perfectly normal behavior. Obviously, I’m not referring to that normal sort of behavior in this discourse. And if you’re reading this and have worked anywhere where you desired a promotion, then you know exactly what kind of perception management this post is referring to.

It can be mentally and emotionally taxing working in an environment up against those psychological archetypes. I learned valuable lessons, though. I learned to appreciate and hold more dearly that which is truly important. I learned that the pursuit of your passions in lieu of a little salary in the short term, is decidedly more rewarding in all aspects in the long term.

Cue the un-smooth segue — in the markets, one can observe a prime-time game of perception management occurring in the hedge fund space with the “hedge fund hotels.” As it is, the thousands of excess, non-alpha adding hedge funds around the world get to charge 2 and 20 to under-perform the indices. Is that the new normal? It will be for the foreseeable future as central bank liquidity drives all risk assets up for the next couple of years, and knuckleheads of the 2 and 20 set try to outsmart a simple rising tide. Observe the following chart courtesy of HSBC’s Q3 hedge fund performance report via ZeroHedge:


Have a look at some of those names north of the S&P’s performance mark of 23.16% return through October. There are several OG’s. Caxton and Tudor. Additional giants include Pershing Square, Maverick, RenTec, Fortress, Brevan Howard, and the massive Millennium. These aren’t exactly the knuckleheads managing $40M. No disrespect to said knuckleheads for siphoning your $800K in fees and the cut for their skills. The list above represents gross fund assets in the hundreds of billions.

Where the career risk comes into play for fund managers is with the “hotel” stocks via the broker network, various grapevines, and 13F’s. Have to be in what Tepper says. Wait, what’s Einhorn buying? Get our damn trader on the line and tell him to average into whatever Dalio’s biggest holding is currently. Icahn bought $2.5B of what?! Now those are gross exaggerations for sure but have a look at this chart of the 50 stocks with the largest number of hedge fund investors through Q2, courtesy of Goldman Sachs Research via ZeroHedge. It shows just how much copycatting truly occurs in the industry and maybe provides just a portion of the explanation as to why so many funds continue to consistently under-perform.


Piggybacking may be one way to consistently generate alpha, but that justifies 2% of assets or even more in some cases? Please. Anyone with the guts and smarts to just hold through this liquidity fiesta could have easily outperformed virtually every hedge fund on the planet year to date. Take a gander at the following snapshot of 2013 YTD returns in some of the popular 3X levered ETF’s, courtesy of


It should go without saying but hindsight is 20/20, as I don’t think the world of speculators saw 117% absolute return just buying and holding a 3X levered RUT product. And I will readily admit that despite how easily money could have been made in 2013 by simply holding a handful of indices, I’ve whipsawed myself in and out of profit this year with various option strategies.

As for the “hedge fund hotels,” well we all saw what happened to Apple. Its parabolic spike came right back down into value territory, which is why it continues to be so widely held. Reasonable multiples to free cash flow in the biggest cash generator in the market will spark the interest of any value investor. Google may also see some downside action in the near future, but I’m not willing to currently bet against a behemoth that pumps out behemoth proportions of innovation and free cash flow. Betting against AIG is like directly betting against the government’s own equity speculation. Like Google, it could potentially work but I don’t want to currently go there either.

Beware of investing on the behalf of how others will perceive you. It could be hazardous to your financial self. As for career benefits, well by all means, manage perceptions till you’re blue in the face. How else are you going to get that edge over Johnny-Windbag to increase your discretionary income and improve your lot in life? Through merit? If you genuinely believe that, then you may want to scroll back to the top and have another read.