Are You Being Fooled By Statistics?

The world’s worst defender of statistical manipulation is the government, followed closely by the financial press. Yes, I guess that counts me too. We are two years away from our nation’s next presidential election, which has historically been good for stocks, so I thought I would normalize some of the government’s economic data to give you a better understanding of the true strength or weakness in our economy. I am not trying to persuade you one way or the other, I am merely trying to remove the deception from the data. I will present a case for the bears followed by the bulls, as there are two sides to every argument and I encourage you to make up your own opinion based on the facts.

Fin Alternatives
Multi-Manager July 27, 2007
ProfitScore Launches Multi-Manager, Long/Short Product

Emerging Manager Monthly
Taking The Lead September 2007
ProfitScore Looks To Take The Lead Diversified Hedge Fund

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Private portfolio management for individual and institutional clients.
Sum of Its Parts

The Whole is Greater Than the Sum of Its Parts

A team’s result is generally always superior to any one individual.  It is why companies have a Board of Directors, why the President has a Cabinet, and, that is why we use a team approach to manage our clients assets.  Not only will this style of account management improve the consistency of your performance, but it will also automatically give you the opportunity to reduce your risk.

Whether you hire manager A in your home town or manager B in another state, one of the greatest risks your investment assets will ever face is the potential bad decisions of a single investment manager. 

The theory is simple – it’s easier to be good at one discipline than a range of them. Take the example of Olympic decathletes. They must spread their training, focus and physical strength across ten different events as opposed to being able to concentrate on one specific discipline.

Below is a table detailing the amount the Sydney 2000 Olympic decathlon champion was outperformed by all the individual event champions:

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There’s no doubt that decathletes are outstanding athletes, but when you compare their performances in each individual event with the specialists, it’s clear an all-round decathlon champion cannot compete with individuals who specialize in just one event.

Because we employ a team of specialists in disciplines like fixed income, long/short strategies, sector rotation, commodities, foreign equities and real estate, you have the opportunity to achieve a better outcome than by relying on a generalist to invest your retirement assets.