What Investment Performance Numbers Really Mean

Is your fund manager good from far, but far from good? If you only learn one thing this year, make it this. Learn how to quickly apply truth serum to performance numbers.

Truth Serum

In this video, I will show you something that many pros don’t want you to know. Why? Because they want to keep collecting the management and performance fees.
My job is different. I am paid a flat fee to look out for you. That’s why I must tell you the truth behind so many of these numbers. Please do your own research. If you invest in a mutual fund, ETF or even a stock picking service, you should gather the information and do this at home. NOW. Remember, the truth as no agenda. That’s why it sets you free.
This 99 MB file is best viewed over Wi-Fi and may take several minutes to buffer over a slow connection.
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The Funds

Morningstar honored Robert Goldfarb and David Poppe, Brent Lynn and one other as Morningstar’s Managers of the Year for 2010. In addition to the Sequoia Fund (SEQUX) and the Janus Overseas Fund (JAOSX), we reviewed the following (click image to enlarge):

InvivoAnalytics U.S. Dollar Satellite Portfolio as of December 31, 2010

RevenueShares Navellier Overall A-100 Fund (RWV) as of January 13, 2011

PowerShares DWA Technical Leaders Portfolio (PDP) as of January 13, 2011

Hussman Strategic Growth Fund (HSGFX) as of January 13, 2011

CGM Focus Fund (CGMFX) as of January 13, 2011

Cambria Global Tactical ETF (GTAA) as of January 13, 2011


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  1. “Truth Serum” piece is superb: clear, simple instruction every investor should have learned in year one of their investing lives. Question: given current market, if you came into $200k today, would you average your way into Core & Satellite over a couple months, or commit it all at once now? Thanks for the great work.

    • I would dollar cost average over a period of 6 months using a ratio of 65% Core and 35% Satellite.

  2. Excellent piece. It has perplexed me to see a major fund report performance considerably higher than what appears to be the “real” investment return, that is, the actual return in dollars. I thought it was some kind of unusual deception and yet it seems to be sanctioned by respected financial reporting and news groups. It is interesting to see how you can normalize the return for comparisons purposes as in your piece. What I cannot understand is how the SEC allows this kind of manipulation, a kind of false advertising.

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