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Our Core Beliefs:

    Our Core Beliefs

  • We do not trust Wall Street or brokerage research at all.  We believe that virtually all Wall Street and brokerage research is conflicted and flawed, and that most brokers cause more harm than good.  The vast majority of the research that we follow is our own, which is evidence based and produced primarily by the academic community.  

  • In general, the more profitable an investment product is for a bank, brokerage firm or an insurance company; the less profitable it will be for the client.

  • The more confusing and complex the investment product; the worse off it will be for the investor (since we believe the complexity is always designed to benefit the financial services company and not the client).

  • Markets work.  Today most public securities markets are extremely efficient therefore they are too reliable (and efficient) to be profitably exploited over the long term.  Decades ago this was not the case.

  • The main goal for the majority of our clients is not to die rich, but to avoid dying poor.   

  • Over the long term most public corporations will make respectable profits and capitalism works. Most asset classes within capital markets will deliver fair and competitive returns over the long term.

  • Recent legislation (REG FD) and technological advances have caused virtually all relevant news and information to be disseminated to all investors instantaneously. Therefore, today it is practically impossible to gain an informational advantage over other investors, especially within highly liquid and transparent markets such as public equities and investment grade fixed income.

  • The intense competition among the hundreds of thousands of professional investors around the world has made it extremely difficult to find enough mispriced (undervalued/overvalued) securities to consistently outperform most asset class benchmarks over the long term.

  • All known and relevant information about most securities is already factored into their prices.  This is especially true in highly transparent, liquid markets such as the U.S. stock & bond markets.

  • The vast majority of professional investment managers will underperform their benchmarks. However, there will always be a small percentage of managers that will outperform.  We believe that this is entirely attributable to the law of larger numbers (random chance).  

  • Of the few managers that appear to have extraordinary skill (and do outperform) on a pre-tax basis, the vast majority of those managers cannot consistently outperform on an after-tax basis.  ....and one cannot "eat" pretax returns.  

  • Index funds and passively managed mutual funds that have similar characteristics to index funds usually outperform most actively managed mutual funds, especially once you factor in all the risks.

  • In general, the larger the commission (fee, sales incentive, or kickback) the worse the investment.  The best investment products do not advertise, pay commissions or share revenue (they do not incentivize middlemen to distribute them).  You usually have to find these investments yourself (since commission based advisors have no financial incentive to recommend them).

  • If a financial advisor is not legally required to put his clients best interest ahead of his own personal best interests, no matter how good his intentions, there are times when he won’t.

  • If you cannot explain your investment in under 30 seconds, you probably do not understand it.  You should never invest in anything that you do not understand.

  • It is not impossible to outperform most market indexes, but it is highly improbable.

  • Virtually every academic study ever done on actively managed mutual funds has found that the small percentage of funds that have consistently beat their market benchmarks, tend to outperform by relatively small % amounts (<1%), and that the vast majority of funds that fail to beat their market benchmarks, tend to underperform by much larger amounts (>1%). Thus, the risk-adjusted odds of outperforming a market index are statistically much worse than they appear.

  • When it comes to mutual funds (and hedge funds) performance, there is absolutely no correlation between positive past performance (great performing funds) and positive future performance.  Positive past performance is not indicative of anything.  However, there is a small positive correlation between funds with negative past performance (poor performing funds) and negative future performance, especially with funds with high expenses.   Poor performing funds with high expenses generally continue to perform poorly.

  • When it comes to investing; the less you pay in commissions and fees, the more your portfolio will be worth over time.  Over the long term, high cost mutual funds (and hedge funds) have a significantly greater chance of lower returns, while low cost funds have a significantly greater chance of higher returns. This is true in every investment category and in every market segment across the globe, especially over longer time periods.

  • When it comes to investing, most investors have a history of acting irrationally, buying risky assets right after the markets have gone up and liquidating right after the markets have gone down, thus the majority of investors long term track records are dismal.

  • At Maci, we do believe that there are a small number of truly superior portfolio managers who can consistently outperform their risk adjusted benchmarks; however, identifying these managers ahead of time is virtually impossible.

  • Most investors need to have a written financial plan.  If you don’t have a plan, you’re not going to stick to it.  Your emotions are going to eventually get in the way, and that is one of the biggest reasons why most investors do poorly.

  • Over the next 20 years most public equity markets will become even more efficient than they have been during the past 20 years.   Therefore, most investors returns will be determined primarily by their asset allocation decisions, and not by market timing or individual stock selection.

  • One of the biggest problems with running a very successful mutual fund (or hedge & private equity fund) is that a funds success is almost always self defeating.  Top performing funds tend to attract tremendous assets fairly quickly and this asset bloat immediately forces successful portfolio managers to drastically change their investment styles.  What inevitably happens is (i) they start focusing their research on much larger companies (ii) they follow and invest in significantly more companies (iii) they need to hire additional staff (iv) they become much less nimble.  Tremendous success also leads these managers to become greedy and increase their fees (keeping most of the excess returns they generate for themselves), become complacent, start working less, leave one fund to start their own fund, or retire early.  These consequences are usually very detrimental to the funds future success; therefore we believe that the vast majority of the most successful funds sow the seeds of their own downfall.

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