Why the disdain for managed funds like ARKK that destroy total market funds?
- Mel Lindauer
- Moderator
- Posts: 35782
- Joined: Mon Feb 19, 2007 7:49 pm
- Location: Daytona Beach Shores, Florida
- Contact:
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
And how about Bill Miller? Didn't I see any article about him cruising off into the sunset on his yacht? Or was that some other former star fund manager?
Best Regards - Mel |
|
Semper Fi
-
- Posts: 1241
- Joined: Wed Mar 06, 2013 3:15 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Yeah it’s one thing to ask a question out of sincerity and, perhaps, the original OP didn’t mean to deride total market funds. But I also can’t blame anyone for taking it as though the OP did, it’s (the headline) not exactly wading softly into a discussion.Mel Lindauer wrote: ↑Wed Jan 05, 2022 12:06 pm Perhaps part of the problem is in response to the rather provocative OP
DESTROY total market funds?Why the disdain for managed funds like ARKK that destroy total market funds?
I also don’t get people affixing some greater responsibility to those now using returns to throw it back at the OP. If people stopped coming here because there’s a regular reminder that this thread exists, they probably weren’t long for here anyway.
-
- Posts: 1241
- Joined: Wed Mar 06, 2013 3:15 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
I’ve learned a lot from you, your posts are the impetus of my current investigation into historic interest rates, how they compare to inflation, etc. I am still trying to wrap me head around that the last 40 years in bonds were the outlier, not the norm, and you were the first person to stress the repercussions of that.willthrill81 wrote: ↑Tue Jan 04, 2022 11:30 amIt wouldn't be surprising if the OP has left due to shame, both personal and concern for receiving it from others. And to be honest, many on this forum have shamed others in the past for deviating from what they believe to be the best. I know because I have been a recipient myself at times, even when my deviations resulted in outperformance, which is partly why I don't discuss my own investment strategy on the open forum any longer, though I continue to discuss it with those genuinely interested via PM.peskypesky wrote: ↑Tue Jan 04, 2022 11:20 amUh-oh. That's not a good sign.
Well, I jumped on the ARKK train in 2021 myself, and after a few months of losing, I sold at a loss and jumped off. It has just continued to drop since then.
I learned my lesson and am sticking with passive index funds.
For better or worse, many here are very militant about the BH principles, certainly much more so than Bogle himself was.
I will disagree, respectfully, that ideas about strategy are not able to be discussed. I think that style of some posters trumps substance, especially the OP in this thread. The alternative would be to ignore this thread, or create dialogue to help the OP become better informed. Not sure (again, OP can always chime back in) that was the goal in the first place.
- willthrill81
- Posts: 32250
- Joined: Thu Jan 26, 2017 2:17 pm
- Location: USA
- Contact:
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Thanks for the kind words.donaldfair71 wrote: ↑Wed Jan 05, 2022 7:39 pmI’ve learned a lot from you, your posts are the impetus of my current investigation into historic interest rates, how they compare to inflation, etc. I am still trying to wrap me head around that the last 40 years in bonds were the outlier, not the norm, and you were the first person to stress the repercussions of that.willthrill81 wrote: ↑Tue Jan 04, 2022 11:30 amIt wouldn't be surprising if the OP has left due to shame, both personal and concern for receiving it from others. And to be honest, many on this forum have shamed others in the past for deviating from what they believe to be the best. I know because I have been a recipient myself at times, even when my deviations resulted in outperformance, which is partly why I don't discuss my own investment strategy on the open forum any longer, though I continue to discuss it with those genuinely interested via PM.peskypesky wrote: ↑Tue Jan 04, 2022 11:20 amUh-oh. That's not a good sign.
Well, I jumped on the ARKK train in 2021 myself, and after a few months of losing, I sold at a loss and jumped off. It has just continued to drop since then.
I learned my lesson and am sticking with passive index funds.
For better or worse, many here are very militant about the BH principles, certainly much more so than Bogle himself was.
I will disagree, respectfully, that ideas about strategy are not able to be discussed. I think that style of some posters trumps substance, especially the OP in this thread. The alternative would be to ignore this thread, or create dialogue to help the OP become better informed. Not sure (again, OP can always chime back in) that was the goal in the first place.
Ideas about strategy can and certainly are discussed. But as I noted above, there is too much hubris present with too many posters. Nobody has all the answers, not even the forum's namesake. Nobody knows the best investment strategy for everyone in all situations. It's called personal finance with very good reason. We should all have a healthy dose of humility and not treat our own investing worldview as automatically superior to others just because the echo chamber agrees with us. That kind of thinking can be downright dangerous.
The Sensible Steward
-
- Posts: 795
- Joined: Sun Oct 15, 2017 4:20 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
MSEQX seems to have consumed the ARKK coolaid. Their picks transitioned from MFAANG in 2021 to hype growth stocks of last year. Fund lost 10% in the past 2 days. Geese! Makes me want to say, “BARKK!”
-
- Posts: 795
- Joined: Sun Oct 15, 2017 4:20 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
-11.65% in 3 daysWeathering wrote: ↑Wed Jan 05, 2022 10:01 pm MSEQX seems to have consumed the ARKK coolaid. Their picks transitioned from MFAANG in 2021 to hype growth stocks of last year. Fund lost 10% in the past 2 days. Geese! Makes me want to say, “BARKK!”
- unclescrooge
- Posts: 6265
- Joined: Thu Jun 07, 2012 7:00 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
SARK (short ARKK) fund is up 8.6% in the past three days.Weathering wrote: ↑Wed Jan 05, 2022 10:01 pm MSEQX seems to have consumed the ARKK coolaid. Their picks transitioned from MFAANG in 2021 to hype growth stocks of last year. Fund lost 10% in the past 2 days. Geese! Makes me want to say, “BARKK!”
- BrooklynInvest
- Posts: 1183
- Joined: Sun Jul 28, 2013 9:23 am
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
I think I remember Warren Buffett saying that the most important attribute for a successful investor was humility. When I read it I thought he was talking about money managers specifically but he may have been talking more broadly?
My road to bogleheaded-ness was a winding journey. AOL stock and others were my "sure fire bets" 20 years ago. I try - not always successfully - to remember that it's a process for everyone.
My road to bogleheaded-ness was a winding journey. AOL stock and others were my "sure fire bets" 20 years ago. I try - not always successfully - to remember that it's a process for everyone.
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
I believe ARKK will be down something like 18% after today, assuming it doesn't rebound, through 8 trading days in 2022. As someone who decided to hold his small (3% of taxable portfolio) position, this is a learning experience.
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
About a year ago my friend was telling me how great this fund is. What timing!
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Maybe a good fund to buy if we have another parabola ahead of us after this pullback completes?
- firebirdparts
- Posts: 4412
- Joined: Thu Jun 13, 2019 4:21 pm
- Location: Southern Appalachia
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
bold strategy, cotton, let's see if it pays off for him.
This time is the same
-
- Posts: 1516
- Joined: Thu Feb 04, 2021 10:52 am
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Don't fight the Fed.
- nisiprius
- Advisory Board
- Posts: 52214
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Maybe
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
-
- Posts: 717
- Joined: Wed Mar 25, 2009 12:58 am
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Cathie Wood can be very persuasive if you listen to her. She can tell a good story. I actually held some of her funds for a short while last year. I only lost a little bit before I realized this was completely against everything I believed!
The problem is that I think she's dead on regarding the impact the "innovation platforms" she always talks about (although I'm not sold on blockchain). BUT that doesn't mean it's easy to invest in.
- xraygoggles
- Posts: 308
- Joined: Sat Sep 15, 2018 3:30 pm
- Location: Paradise
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Has the OP ever responded? This is a great learning experience, if nothing else.
Or maybe they went all-in shortly after posting this thread, and is now stalking the forum ignominiously.
Or maybe they went all-in shortly after posting this thread, and is now stalking the forum ignominiously.
Simplicity is the key to brilliance - Vti & chill.
- anon_investor
- Posts: 15122
- Joined: Mon Jun 03, 2019 1:43 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Interestingly, around the time this thread was started, I had a former coworker who changed jobs and rolled over his 401k into an IRA and invested all of it into the different ARK ETFs... he doesn't like to talk about it... he only talks about his individual stick wins in his taxable account.xraygoggles wrote: ↑Thu Jan 13, 2022 6:04 pm Has the OP ever responded? This is a great learning experience, if nothing else.
Or maybe they went all-in shortly after posting this thread, and is now stalking the forum ignominiously.
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
The OPs last post, not in this thread, from 10/26/2021:xraygoggles wrote: ↑Thu Jan 13, 2022 6:04 pm Has the OP ever responded? This is a great learning experience, if nothing else.
Or maybe they went all-in shortly after posting this thread, and is now stalking the forum ignominiously.
Bwlonge wrote: ↑Tue Oct 26, 2021 10:56 am I tried picking stocks for a while, had solid information and those stocks are now doing well but with a lot of volatility. I still managed to lose money on them. I'm coming back to passive investing because the hype around investing just isn't for me. It's still very hard knowing people are getting rich quickly while I am not.
- unclescrooge
- Posts: 6265
- Joined: Thu Jun 07, 2012 7:00 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
In order for it to pan out, wouldn't growth have to limited to a smaller subset of the market? What happens if all companies see growth, not just this small subset? Is it worth overpaying to such an extent for these companies? I find that hard to rationalize.firebirdparts wrote: ↑Thu Jan 13, 2022 4:06 pmbold strategy, cotton, let's see if it pays off for him.
- willthrill81
- Posts: 32250
- Joined: Thu Jan 26, 2017 2:17 pm
- Location: USA
- Contact:
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
When I was much younger, I held Van Wagoner's Post Venture fund back for a while. It had some tremendous years before the dot-com bubble popped.Escapevelocity wrote: ↑Wed Jan 05, 2022 5:45 pmyou forgot Garrett Van Wagonercanadianbacon wrote: ↑Tue Jan 04, 2022 11:09 amReading the Bernstein book reminded me we've been here before. Gerald Tsai, Robert Sanborn, Michael Kassen... Cathie Wood.willthrill81 wrote: ↑Tue Jan 04, 2022 10:16 amThis thread should be a sticky, a perennial reminder that what seems like a 'sure thing' is generally not that at all.
The Sensible Steward
-
- Posts: 2843
- Joined: Wed Feb 12, 2014 9:58 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
I don't see any evidence that ARKK has caused any damage to any total market fund, let alone destroy anything. I have no concerns about keeping most of my equity portfolio in index funds, including total market.
-
- Posts: 2006
- Joined: Mon Mar 02, 2020 4:33 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
ARKK - You were the Chosen One! It was said that you would destroy total market funds, not underperform them.
- princetontiger
- Posts: 132
- Joined: Wed Oct 08, 2014 9:31 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Anyone remember Fairholme?
These things are easy to spot. Every bull has its fund.
Meanwhile, VT is down 3% from its highs. Not 60%... and down 2% past few months, not 30%.
These things are easy to spot. Every bull has its fund.
Meanwhile, VT is down 3% from its highs. Not 60%... and down 2% past few months, not 30%.
- princetontiger
- Posts: 132
- Joined: Wed Oct 08, 2014 9:31 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
"It is the Index funds that are evil"Hyperchicken wrote: ↑Fri Jan 14, 2022 12:15 am ARKK - You were the Chosen One! It was said that you would destroy total market funds, not underperform them.
--Darth ARKK
- nisiprius
- Advisory Board
- Posts: 52214
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
To me, the evidence that it is bad to invest in things like ARKK is that--based subjectively on forum posts and occasionally dipping into the financial press--
"Nobody" had spotted, recommended, or talked about ARKK during the time period from January, 2017 through August, 2018, a twenty-month period over which it multiplied investors' money by 2.5x and turned in a remarkably steady growth averaging +70% per year.
Look at how hard it would have been to lose money in ARKK!
Source
Look at the chart. To date, it has been almost impossible to lose significant money in ARKK! You'd have had to be a mistiming genius to do it! There was a total range of seven years for your buy and sell dates. I don't know how to characterize this precisely but broadly, to lose money you first needed to buy within about a four month period--wait until you'd missed out on most of the 2021 growth, and then you needed to wait for it to tank a bit before selling, perhaps another eight-month period.
My point is: even if you believe there are geniuses who can "destroy" VTI, what good is it if you can't spot them in time to invest profit from them? To date, it has been hard to lose money in ARKK, yet that's exactly what I think most ARKK investors have managed to do.
Anyone know where to find "investor return" statistics for ARKK?
Or one of those every-pair-of-dates "heat maps?"
"Nobody" had spotted, recommended, or talked about ARKK during the time period from January, 2017 through August, 2018, a twenty-month period over which it multiplied investors' money by 2.5x and turned in a remarkably steady growth averaging +70% per year.
- Cathie Wood was the same person
- Her strategy of single-minded focus on "disruptive innovation" and nothing else was the same
- The fund had been around for over two years, plenty of time to find out about it and decide if you believed in the strategy
- There was well over a year available to spot the performance and get in on it.
- There was no decline following August 2018
- Anyone who got in late on 1/2017 to 8/2017 would have done pretty well and there was no decline to scare them off, so they'd have been set up for 2020.
Look at how hard it would have been to lose money in ARKK!
Source
Look at the chart. To date, it has been almost impossible to lose significant money in ARKK! You'd have had to be a mistiming genius to do it! There was a total range of seven years for your buy and sell dates. I don't know how to characterize this precisely but broadly, to lose money you first needed to buy within about a four month period--wait until you'd missed out on most of the 2021 growth, and then you needed to wait for it to tank a bit before selling, perhaps another eight-month period.
My point is: even if you believe there are geniuses who can "destroy" VTI, what good is it if you can't spot them in time to invest profit from them? To date, it has been hard to lose money in ARKK, yet that's exactly what I think most ARKK investors have managed to do.
Anyone know where to find "investor return" statistics for ARKK?
Or one of those every-pair-of-dates "heat maps?"
Last edited by nisiprius on Fri Jan 14, 2022 10:38 am, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
-
- Posts: 717
- Joined: Wed Mar 25, 2009 12:58 am
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
You joke, but ARKK basically said this! https://twitter.com/Rick_Ferri/status/1 ... 9880050694leonidas wrote: ↑Fri Jan 14, 2022 7:55 am"It is the Index funds that are evil"Hyperchicken wrote: ↑Fri Jan 14, 2022 12:15 am ARKK - You were the Chosen One! It was said that you would destroy total market funds, not underperform them.
--Darth ARKK
Watch the video in Rick's link.
-
- Posts: 717
- Joined: Wed Mar 25, 2009 12:58 am
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
I don't think this is true at all. Early 2021 was Peak-ARK. Also, look at the date this thread was started.
https://www.morningstar.com/articles/10 ... -to-invest
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Reposting this so Nisi can see when all the money flowed into the fund.HomerJ wrote: ↑Fri Dec 10, 2021 4:43 pmSee, that's an EXCELLENT graph...tsohg wrote: ↑Fri Dec 10, 2021 2:58 pmYour friend's experience sounds like a common one. Can anyone hazard a guess at what the following chart will look like over the next 5 years? My bet would be on massive outflows.
Why are we discussing returns in 2017 when (relatively speaking) no one was invested to achieve those returns? There's a much better chance this fund will cease to exist in 5 years than it will achieve 40% yearly growth.I don't know why people weren't gushing over ARKK at the end of 2017. It was even an opportunity to get in at the end of a fabulous run and not have to wait very long for the next one.
Showing returns from inception from any mutual fund doesn't prove anything...
The VAST majority of investors never see those returns. It's not until AFTER the fund has huge returns, and makes the news feeds, and the top-10 funds of the year lists, THEN the investors pile in.
So not only do they miss the big initial returns, but then they also make it harder for the fund manager to continue to hit outsize returns.
40% a year is possible when you have a smaller fund and you can make big bets on a few select companies.
When you have $50 billion under management, it's a lot harder to find large enough companies that will grow that much. You're investing in all the same large tech companies that every other active tech fund manager is investing in.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
- nisiprius
- Advisory Board
- Posts: 52214
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
I screwed up, I meant 2020.thenextguy wrote: ↑Fri Jan 14, 2022 8:19 amI don't think this is true at all. Early 2021 was Peak-ARK. Also, look at the date this thread was started.
Beautiful!
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: Anyone investing in ARKK since it was first mentioned here is now behind VTI
I bought a little ARKK in late July '20 for $83.58, and sold in early May '21 at $$107.03nisiprius wrote: ↑Tue May 11, 2021 5:35 pm I don't know a definitive way to search for postings by date, but I think the first mention of the ARK funds in this forum was made on October 5th, 2020: Is now the time to think about active investing?
Anybody who invested in ARKK after October 5th, 2020, now has less money than they would have had if they had put it into the Vanguard Total Stock Market Index Fund, VTI.
Source
In order to have beaten VTI, a buy-and-hold investor would have had to invest in ARKK before October 5th, 2020. Obviously that was possible, but I don't think very many people had heard of it before then.
Did any readers of this posting buy ARKK before October, 2020?
I picked up a 28% gain in 9 months.
Glad I got out when I did.
The first trading day in '21 would have been much better, as that is when the decline began.
Last edited by Papajoe56 on Fri Jan 14, 2022 11:08 am, edited 1 time in total.
- nisiprius
- Advisory Board
- Posts: 52214
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
So I have done a little spreadsheet work. Possibly a silly metric but here are the results.
The data I have for ARKK covers single-month growth from 11/2014 through 12/2021 or 86 months.
If you had bought in any randomly-selected month in those 86, and sold in any randomly-selected subsequent month in that entire period, you would have had a 91.2% chance of making money and only an 8.8% chance of losing money.
And it's not a case of negative skew, either. Again, this is a fairly silly calculation but if you had invested $10,000 into ARKK at any random month since inception, and then sold it at any random month subsequently, on the average (plain old arithmetic average) you would have made +41.49%.
My point is not that ARKK is a good investment. My point is that "investing whenever you learn about some really impressive fund" is amazingly bad even when the fund itself has done well.
The data I have for ARKK covers single-month growth from 11/2014 through 12/2021 or 86 months.
If you had bought in any randomly-selected month in those 86, and sold in any randomly-selected subsequent month in that entire period, you would have had a 91.2% chance of making money and only an 8.8% chance of losing money.
And it's not a case of negative skew, either. Again, this is a fairly silly calculation but if you had invested $10,000 into ARKK at any random month since inception, and then sold it at any random month subsequently, on the average (plain old arithmetic average) you would have made +41.49%.
My point is not that ARKK is a good investment. My point is that "investing whenever you learn about some really impressive fund" is amazingly bad even when the fund itself has done well.
Last edited by nisiprius on Fri Jan 14, 2022 11:47 am, edited 3 times in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Indeed, it's not like the rest of the market is oblivious to these technologies and their potential. One thing that seems completely absent from any of her videos is why the mostly small/mid cap stocks SHE picks are going to be the ones to realize the fruits of innovation - why won't all of those profits just be gobbled up by the FAANGs, who are plenty innovative in their own right.thenextguy wrote: ↑Thu Jan 13, 2022 5:34 pmCathie Wood can be very persuasive if you listen to her. She can tell a good story. I actually held some of her funds for a short while last year. I only lost a little bit before I realized this was completely against everything I believed!
The problem is that I think she's dead on regarding the impact the "innovation platforms" she always talks about (although I'm not sold on blockchain). BUT that doesn't mean it's easy to invest in.
I also haven't heard ARK say much about the management talent at the companies they invest in, which for growth companies is arguably the most important thing to look at.
Last edited by Semantics on Fri Jan 14, 2022 10:57 am, edited 1 time in total.
Re: Anyone investing in ARKK since it was first mentioned here is now behind VTI
Hate to tell you this, but the Total Stock Market Index Fund was up 40% during those 9 months.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
ARK has been killing it over the past 12 months!
Re: Anyone investing in ARKK since it was first mentioned here is now behind VTI
- arcticpineapplecorp.
- Posts: 15080
- Joined: Tue Mar 06, 2012 8:22 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
here's something I just read in IFA's Book "Index Funds":
https://www.ifa.com/pdfs/index-funds-12 ... estors.pdf
The First Shall Be the Last:
a picture (or 4) are worth a 1000 words, huh?
another thing to consider is that often a mutual fund varies its style over time (doesn't stay true to its roots). Here's some examples:
compare the style drift of active mutual funds above with an index fund (below):
https://www.ifa.com/pdfs/index-funds-12 ... estors.pdf
The First Shall Be the Last:
a picture (or 4) are worth a 1000 words, huh?
another thing to consider is that often a mutual fund varies its style over time (doesn't stay true to its roots). Here's some examples:
compare the style drift of active mutual funds above with an index fund (below):
Last edited by arcticpineapplecorp. on Fri Jan 14, 2022 8:38 pm, edited 1 time in total.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions |
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Wow, can those graphs be put in the wiki and stickied to the top?!
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
- Portfolio7
- Posts: 1128
- Joined: Tue Aug 02, 2016 3:53 am
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
I'm out. Bought ARKK and ARKG about 13-14 months ago.
The interesting thing to me is that I bailed on it after a less than 20% loss, on a tiny sliver of my portfolio.
I understand my core portfolio and the funds in it, and have not had a problem holding them through 27 years and multiple 30% plus drawdowns.
Now, once ARKK was down 20% I was coming to some realizations. Turnover is high, and I realized that maybe they'd just stock it with more high risk stocks, and it could just keep losing and losing. I considered what I would do with spare cash at that moment, and realized I'd drop it in small cap and EM funds I own that are slightly underweighted vs my base AA. So, I sold all my ARK funds and did exactly that.
I have never behaved similarly with my core holdings. I've seen drops almost twice the size of what ARK has experienced without wanting to bail. I thought about it a bit and considered. I didn't understand why I was investing in it, really. I was just buying a lottery ticket. When I started losing money, I just wanted out. I was glad that I kept my purchases so small, but also glad to have gone through the experience. Even an experienced investor can be well served by revisiting the reasons we invest the way we do.
The interesting thing to me is that I bailed on it after a less than 20% loss, on a tiny sliver of my portfolio.
I understand my core portfolio and the funds in it, and have not had a problem holding them through 27 years and multiple 30% plus drawdowns.
Now, once ARKK was down 20% I was coming to some realizations. Turnover is high, and I realized that maybe they'd just stock it with more high risk stocks, and it could just keep losing and losing. I considered what I would do with spare cash at that moment, and realized I'd drop it in small cap and EM funds I own that are slightly underweighted vs my base AA. So, I sold all my ARK funds and did exactly that.
I have never behaved similarly with my core holdings. I've seen drops almost twice the size of what ARK has experienced without wanting to bail. I thought about it a bit and considered. I didn't understand why I was investing in it, really. I was just buying a lottery ticket. When I started losing money, I just wanted out. I was glad that I kept my purchases so small, but also glad to have gone through the experience. Even an experienced investor can be well served by revisiting the reasons we invest the way we do.
"An investment in knowledge pays the best interest" - Benjamin Franklin
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
I bought ARKK and ARKG in early 2021. I averaged down through the entire year. I got called out of ARKK in the fall on a short sale of call options thank god. Sold ARKG in December for a 30k loss to TLH. Again thankfully. Damn. It’s at 50 now.
Never again.
I got burned by Bruce Berkowitz in the early 2010s and now by Cathie Wood. I’m done with these people.
I wonder if people fleeing crazy Cathy is taking the stocks with it.
Never again.
I got burned by Bruce Berkowitz in the early 2010s and now by Cathie Wood. I’m done with these people.
I wonder if people fleeing crazy Cathy is taking the stocks with it.
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
It will be amusing (to me at least) in the near future the next hot fund manager bursts on the scene after a year of over performance and people will bring up Cathie Wood and ARKK as an example of what typically happens but people will have long forgotten about her (just like the dozens of other fund managers who had their 15 minutes of fame).
- firebirdparts
- Posts: 4412
- Joined: Thu Jun 13, 2019 4:21 pm
- Location: Southern Appalachia
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
I don't know. I'm kinda thinking when everybody thinks she's dead is when it'll start climbing again. you know how they say in Vegas, luck is bound to change.
This time is the same
-
- Posts: 1516
- Joined: Thu Feb 04, 2021 10:52 am
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
They also say the casino always wins.firebirdparts wrote: ↑Sat Jan 15, 2022 2:54 pm I don't know. I'm kinda thinking when everybody thinks she's dead is when it'll start climbing again. you know how they say in Vegas, luck is bound to change.
-
- Posts: 224
- Joined: Sat Apr 25, 2020 8:28 am
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
The fact that ordinary investors can invest in a managed fund like ARKK should tell you everything you need to know!
Unlike most Bogleheads, I do think that alternative investments can generate meaningful alpha.
But the ones who do are either:
A) Only open to institutional investors. There's no point letting retail invest when institutional investors like pension funds and endowments can invest far more so there are fewer investors to worry about. ARKK is open to retail investors for a reason.
B) Investing their own money only. If the fund is that successful, they probably don't need retail investors.
Unlike most Bogleheads, I do think that alternative investments can generate meaningful alpha.
But the ones who do are either:
A) Only open to institutional investors. There's no point letting retail invest when institutional investors like pension funds and endowments can invest far more so there are fewer investors to worry about. ARKK is open to retail investors for a reason.
B) Investing their own money only. If the fund is that successful, they probably don't need retail investors.
- nisiprius
- Advisory Board
- Posts: 52214
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
????? ARKK isn't what's usually meant by an "alternative investment." As I understand the terminology, "alternatives" means investments other than securities (stocks and bonds). ARKK is a stock investment.DarkMatter731 wrote: ↑Sat Jan 15, 2022 3:12 pm The fact that ordinary investors can invest in a managed fund like ARKK should tell you everything you need to know!
Unlike most Bogleheads, I do think that alternative investments can generate meaningful alpha.
But the ones who do are either:
A) Only open to institutional investors. There's no point letting retail invest when institutional investors like pension funds and endowments can invest far more so there are fewer investors to worry about. ARKK is open to retail investors for a reason.
B) Investing their own money only. If the fund is that successful, they probably don't need retail investors.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
-
- Posts: 224
- Joined: Sat Apr 25, 2020 8:28 am
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Yes, I understand that.nisiprius wrote: ↑Sat Jan 15, 2022 4:48 pm????? ARKK isn't what's usually meant by an "alternative investment." As I understand the terminology, "alternatives" means investments other than securities (stocks and bonds). ARKK is a stock investment.DarkMatter731 wrote: ↑Sat Jan 15, 2022 3:12 pm The fact that ordinary investors can invest in a managed fund like ARKK should tell you everything you need to know!
Unlike most Bogleheads, I do think that alternative investments can generate meaningful alpha.
But the ones who do are either:
A) Only open to institutional investors. There's no point letting retail invest when institutional investors like pension funds and endowments can invest far more so there are fewer investors to worry about. ARKK is open to retail investors for a reason.
B) Investing their own money only. If the fund is that successful, they probably don't need retail investors.
I'm just pointing out that actively managed products that generate meaningful alpha aren't open to the public i.e. alternative investments. I'm not convinced that an ETF like ARKK is going to consistently 'beat' the market when you look at risk-adjusted returns.
Alternatives generally refer to private equity and hedgefund investments.
I'm working at a fundamental fund myself next year, which has consistently beat their benchmark but only open to institutional investors.
- arcticpineapplecorp.
- Posts: 15080
- Joined: Tue Mar 06, 2012 8:22 pm
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Yep. Unfortunately the newbies will ask "Cathie who?"FlatSix wrote: ↑Sat Jan 15, 2022 10:50 am It will be amusing (to me at least) in the near future the next hot fund manager bursts on the scene after a year of over performance and people will bring up Cathie Wood and ARKK as an example of what typically happens but people will have long forgotten about her (just like the dozens of other fund managers who had their 15 minutes of fame).
Those who fail to learn from history are condemned to repeat it.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions |
- nisiprius
- Advisory Board
- Posts: 52214
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: Why the disdain for managed funds like ARKK that destroy total market funds?
Exactly. What percentage of people reading this know who Bruce Berkowitz is?FlatSix wrote: ↑Sat Jan 15, 2022 10:50 am It will be amusing (to me at least) in the near future the next hot fund manager bursts on the scene after a year of over performance and people will bring up Cathie Wood and ARKK as an example of what typically happens but people will have long forgotten about her (just like the dozens of other fund managers who had their 15 minutes of fame).
How about that? His Fairholme Fund returned 41% in 2020.
A "telltale chart," described by John C. Bogle, plots the ratio of the cumulative growth of two funds. Basically, it measures the distance between two lines on a semilog growth chart. Despite spectacular early years, and then steady outperformance through 2010, and earning 41% in 2020--the only way a committed buy-and-hold investor could be ahead today--without selling the fund at the right time--would be to have bought the fund before 2002.
Last edited by nisiprius on Sat Jan 15, 2022 6:06 pm, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.