From TheStreet.com, another tale of investors who just weren’t patient enough. In this case, though, the culprits were fund companies themselves!
…retail investors aren’t the only ones who make questionable moves at market bottoms. Fund companies recently fired several prominent managers, including David Dreman, former manager of the DWS Dreman High Return Fund(KDHAX Quote); Bill Miller who oversaw part of the Masters Select Equity Fund(MSEFX Quote); and Robert Turner of the Vanguard Growth Equity Fund(VGEQX Quote).
Those managers had suffered periods of poor performance. But after they were fired, their investing styles came roaring back.
In one case, Mr. Dreman had managed the fund successfully for more than 20 years! But a good 20-year track record was apparently no match for a couple of lousy years in the recent past—you’re fired.
Investor behavior is not always good even with professional investors. It’s not surprising that retail investors who might lack reliable information and expertise have problems. It’s a little more suprising to realize that institutional investors also struggle, given that most of them have access to professional consultants. Now it seems that professional investors are subject to the same cognitive biases as all of the rest of us. Getting the most out of your chosen manager usually takes a large dose of patience, especially during the occasional periods of underperformance.
