The predictable downside of chasing performance
The last Breakfast with Benjamin menu of the year features: A cautionary tale on chasing performance; why active management is not dead yet; cheap oil claims its first energy-sector victim; and a reminder that annuities are not investments.
- Chasing performance is almost always a bad strategy, so don’t make it yours in 2015. The culprit is risk.
- Despite the steady drumbeat to the contrary, active management is not dead. Investing is getting more diversified and less expensive.
- In fact, next year could prove to be the year of the active manager. The case for active management gets stronger every day.
- The first victim of falling oil prices is a liquefied natural gas terminal in Texas. The numbers just don’t add up to move forward, and this won’t be the last casualty. The project was scheduled to begin exports in 2018.
- For the last time: Annuities are not investments, they’re contractually guaranteed transfers of risk strategies. Don’t confuse a bull market with genius.
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