In Search of the Perfect Investment

This is the performance of a private equity fund I own a little of.

Click on the chart if you can’t see all of it. Click to come back.

After ten years, the fund’s value is now 1.55 times what we put in, which means it has averaged 4.48% a year in its 10 year life so far.

The fund should have sold all its holdings by now and returned a handsome profit to its owners. But it hasn’t — largely because it’s been a semi-horrible ten years.

This fund is not untypical of those who started their life in the halcyon days of 2005-2006 (unsuspecting investors were easy to sell) — only to be hit by 2008, when everything fell apart.

By contrast, Vanguard’s VTI — “total stock market ETF” — has achieved 7.95% a year over the same ten years. That’s much higher.

Had I invested $1 million in this equity fund, I would now be worth $1,550,000. Had I put $1 million in VTI, I would now be worth $2,148,950 — or $598,950 more. I’d be 40% better off. (I did invest in the fund. And fortunately I invested also in VTI.)

There are several morals to this story:

+ Timing is critical. Committing yourself to long 10-year up-and-down business cycle is a big risk.

+ Funds tend to last longer because the management fees are so huge — often 2% of assets managed and 20% of profits. By contrast VTI charges 0.04% of assets managed and no % of profits. The difference between 2% and 0.04% puts a lot of money in your pocket, not the manager’s. That’s critical to understand.

+ What went on in previous fund generations (where returns were 30% to 40% a year) will not go on in a new one. That’s sort of Murphy’s Law of funds. I hope 2018 won’t be 2008. But you never know. See the next point.

+ ETFs and publicly listed stocks are liquid. You can sell them when they hit your 15% stop loss threshold. And buy them back when they rise 15% from the bottom.  You can’t do that with private equity funds. You’re stuck with them.

Don’t Do Stupid. That’s my long-term refrain.

We’re no longer 23. We need to stop acting as if we were. The saga of friends:

+ His trainer at the gym suggested a new jumping move. He missed and broke bones in his wrist.

+ It was March and icy. He slipped. His ankle now has a metal plate. His leg still hurts.

+ He had a stroke ten years ago. He’s fallen often since. This week he fell while trying to sit on his walker — a manoeuvre he’d never done before. He hit his head and blood poured from his ear.

Jared Kushner On Middle East Peace:

Achieving it is one of many tasks he’s been charged with solving.

His words: “What Do We Offer That’s Unique? I Don’t Know.“

Read the Kushner lecture to congressional interns, courtesy Wired Magazine. Click here.

Russia is sending 100,000 troops to Belarus for a military exercise. 

In case you’re wondering, here’s where Belarus is:

Greatest children pleaser — the Intex Recreation 58426EP Crystal Blue Pool

Costs the grand sum of $10. 95. Click here. 

You’ll also need this to blow it up.

It will inflate your pool, your tires, your soccer balls, etc. A serious bargain at $29.99. Click here.

Comedians Protest Anthony Scaramucci’s Ouster

WASHINGTON (The Borowitz Report)-Thousands of angry comedians protested outside the White House on Monday afternoon, demanding the immediate reinstatement of the ousted communications director Anthony Scaramucci.

Chanting “Bring back Mooch,” the irate funnymen and funnywomen argued that the abrupt removal of Scaramucci was akin to taking the food out of their families’ mouths.

Industry estimates had projected that Scaramucci’s presence on the White House staff would generate between four and five billion dollars for the comedy industry this year alone, a windfall that has now been erased.

Buddy Schlantz, the owner of the Bethesda, Maryland, comedy club known as the Laff Pagoda, travelled to the White House to protest what he called “a direct assault on the comedy community.”

“Most comics I know are in a state of shock,” he said. “Years from now, comedians will be asking each other, `Where were you when you found out that Scaramucci was canned?’ “

How times have changed

The logic of the court

Reilly went to trial for armed robbery. The jury foreman came out and announced, ‘Not guilty.’

‘That’s grand!’  shouted Reilly. ‘Does that mean I can keep the money?’

Almost there

Mrs. Feeney shouted from the kitchen, ‘Is that you I hear spittin’ in the vase on the mantle piece?’

‘No,’  said himself, ‘but I’m gettin’ closer all the time.’

The logic of bombs

Paddy & Mick find three grenades, so they decide to take them to a police station.

Mick: “What if one explodes before we get there?”

Paddy: “We’ll lie and say we only found two.”

Harry Newton, who is pleased that one of our stocks — Apple — reported such great numbers and rose substantially after hours. Amazon also bounced back a little yesterday, suggesting that it may be worth buying this morning. SQ also bounced. Buy it on dips.

Grandfathers are really stupid. Here’s the real names of my grandkids:

From left, Sophie, Peter and Eleanor: