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Thursday, May 28, 2009

"Wisdom" From the Morningstar Conference

Morningstar is in the midst of its annual investment conference where the best and the brightest of the mutual fund industry presents their views. I must say I am not impressed.

Take a look at the quotes below and see if they match up to the often made assertion that unlike index investing active investors will know when to get out of the market to avoid market declines and will be able to choose outperforming stocks.

Mea culpa: Fund managers pinpoint where they went wrong in the crash
‘We could have done more but we weren’t fast enough,’ one said
By Lisa Shidler
May 28, 2009
Top fund managers admitted they’ve made several mistakes in managing funds during this economic downturn.
They acknowledged missed buying opportunities and, on the other end of the spectrum, waiting too long to sell certain funds, the managers said today at Chicago-based Morningstar Inc.’s annual investment conference in that city.

The ups and downs of the market roller coaster happened so suddenly that Bruce Berkowitz, founder of Fairholme Capital Management LLC of Miami, admits much of his time was spent trying to react to the market.

“We could have done more but we weren’t fast enough,” he said.

“There was so much defense going on that it’s hard to get focused on offense at that darkest point.”

Meanwhile, Wally Weitz, president of Omaha, Neb.-based Wallace R. Weitz & Co., said he regrets not selling many stocks when his firm recognized the start of the recession more than a year and a half ago.

Meggan Walsh, Houston-based senior portfolio manager and lead portfolio manager of the Aim Diversified Dividend Fund of Houston-based Invesco Aim Management Group Inc., said she’s wondering whether her firm erred when it purchased shares of Capital One Financial Corp. of McLean, Va.

“Capital One is our problem child,” she said. “It’s too soon to tell if it’s a mistake.”

But Bill Nygren, portfolio manager of the Oakmark Fund for Chicago-based Harris Associates LP, said he’s sticking with Capital One, although he admits the regulatory environment could cause problems. He believes consumers want these types of companies to exist and that ultimately Capital One has potential for great value

capital one chart is at top

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