Post of the Day
April 22, 1998
Beardstown Ladies Collection
Subject: Re: Dividing Line Test
Your answer reminds me a lot of the monolithic responses at HQ a couple of days ago. It may be true that the BL helped a lot of people. Yet one could make a similar argument that mutual fund managers, even though most of them have tended to underperform the standard benchmarks, have also "helped a lot of people." Mutual fund companies have made it easy for investors to regularly invest money by withdrawing money from paychecks or checkbooks. Without this procedure, many people have gotten in the habit of investing regularly, perhaps the real key to long-term success in investing. Moreover, many who have invested in mutual funds--even underperforming ones--have used the money to send their children to college, to help their local churches or charities, and, in general, to help society.
|Yet the MF continues to rag on such companies by positing a dichotomy between the evil "wise" and the good "Fools," a dichotomy that seems more apt in the world of professional wrestling than in reality.|
Mutual fund managers might have given them a return that beat CD; they deserve at least a little of the credit. One might add that a number of brokerage houses and mutual fund companies, no doubt, give money to charity and, hence, can argue that they have done a lot of good for people. Yet the MF continues to rag on such companies by positing a dichotomy between the evil "wise" and the good "Fools," a dichotomy that seems more apt in the world of professional wrestling than in reality. If they are going to defend the BL for doing good, shouldn't they do the same for mutual fund companies? Is there that much of a difference? Both have deceived the public while nevertheless doing some good.
The argument, therefore, that the BL deserve some credit for helping people take control of their investments is true. IMO, though, those at Fool HQ should remember that the same could be said about those bogeymen, the "Wise."
I think the six TMF takes on the Beardstown Ladies are dead wrong and logically inconsistent. The illogic lies in listing important principles like honesty and integrity and then failing to apply these principles to the BLs.
A mistake does not, in and of iteself, compromise honesty and integrity. But the way in which the mistake is dealt with certainly does. As others have pointed out the books still carry the erroneous return figure. As others have pointed out, there is ample evidence that the mistake was known well before it was admitted to. And, as other have pointed out there is no indication that the ladies are giving the money back. It is these things that make the ladies and their publisher dishonest and unethical, IMO.
|Arguing that people should have checked it out themself is disingenuous, since the book did not contain the data a reader would have needed to reconstruct the history and compute the correct return.|
Arguing that other advisors out there are no better is besides the point. Am I honest if I rob a grocery store because there are other people out there who rob banks?
Arguing that people should have checked it out themself is disingenuous, since the book did not contain the data a reader would have needed to reconstruct the history and compute the correct return. So how could the reader check it out? Addressing this issue, one person in this discussion said that they followed a method on paper for a year before deciding to use it. What foolishness!! What does one year prove? Not a blessed thing. Short of following the ladies' methods for 10 years on paper the reader had **NO** way to check it out for themselves.
If the ladies keep the money they have made on this little empire they have built, they will be no better than someone who notices that the cashier has given then too much change and keeps the extra. Only they will have done it on a far grander scale.