Sue Smart: "The Case of the Over-Diversified Portfolio #3"
Lori's lair was in an old church. She had replaced the pipe organ with a
multi-screen workstation that ran on the fastest processors that money could
buy. She claimed that the moist silence of the old sanctuary helped her
insights from the whirling kaleidescope of graphs, charts and tables that
surrounded her.
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She didn't even look up when we entered. She new that we were
coming and perhaps she sensed the slight tightening of molecules that
accompanied our entrance.
"It's in the first pew", she said. "I
finished the work yesterday."
Still not looking up, she motioned for us to take a place in the front pew.
There we found a stack of computer printouts. "The summary is on the
first page. Sit down before you read it!"
It was incredible. The total return from the portfolio had been less than
TBills over the last ten years. The overall equity return was less than any of
the major stock indexes. The bond return was barely positive. I had to break
it to him gently, but Lori beat me to it. |
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"You've got yourself quite a bundle of risk and return",
Lori said.
"I know", Bythe said proudly. "I go to a lot of these
financial planning seminars to stay in touch with what's going on in the markets".
"Let me guess", she said. "You were at the "Opportunities
In Emerging Markets" seminar put on by the ForkOver Group in
1993?"
"That's how I got into the Banger Bangkok Fund", he
said.
"Ever consider doing a bit of your own reading and research",
she inquired?
"Prefer to hear from the experts", said Bythe.
"Your portfolio has lower return and higher risk profile than
anything that I have ever seen", said Lori bluntly.
"I think its time for you to learn a little something about
investing," she continued, "before you manage to make this
portfolio disappear into the financial netherworld from whence it came."
Bythe was thunderstruck. Disoriented in his shock, he sat down slowly.
"Wh....What do you mean", he said hesitantly.
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