Peregrine falcon fledgling in SF

The San Franciso Peregrine falcon couple on the PG&E building had four fledglings this year. All doing well so far. Here's a shot of one of the males (tiercel).

Picture by Glenn Nevill.

You can contribute to the group that sponsors the web camera and fledge watch by going to the UC Santa Cruz web site:

https://secure.imodules.com/s/1069/index-2-column.aspx?sid=1069&gid=1&pgid=361&cid=970

Be sure to type "SCPBRG" into the "Other Area" dialog box.

Managers vs. Markets

Proponents of active management believe that skilled managers can outperform the financial markets through security selection, market timing, and other efforts based on prediction. While the promise of above-market returns is alluring, investors must face the reality that as a group, US-based active managers do not consistently deliver on this promise, according to research provided by Standard & Poor’s.

S&P Indices publishes a semi-annual scorecard that compares the performance of actively managed mutual funds to S&P benchmarks. Known as the SPIVA scorecard1, the report analyzes the returns of US-based equity and fixed income managers investing in the US, international, and emerging markets. The managers’ returns come from the CRSP Survivor-Bias-Free US Mutual Fund Database, and the managers are grouped according to their Lipper style categories.2

The graph below features fund categories from the most recent SPIVA scorecard—all US equity funds, international funds, emerging market funds, and global fixed income funds—and shows the percentage of active managers that were outperformed by the respective S&P Indices in one-, three-, and five-year periods. These are only four of thirty-five equity and fixed income fund categories. But a deeper analysis confirms that the active manager universe usually fails to beat the market benchmarks over longer time horizons. Underperformance of active strategies is particularly strong in the international and emerging markets, where trading costs and other market frictions tend to be higher.

Over the last five years, about 60% of actively managed large cap US equity funds have failed to beat the S&P 500; 77% of mid cap funds have failed to beat the S&P 400; and two-thirds of the small cap manager universe have failed to outperform the S&P Small Cap 600 Index. Furthermore, across the thirteen fixed income fund categories, all but one experienced at least a 70% rate of underperformance over five years.

In 2009, active funds experienced more success over a one-year period, and proponents typically highlight those results in the SPIVA scorecard. However, one-year results are not consistently strong from year to year, and investors should not draw conclusions from short-term results. Over three- and five-year periods, most fund categories have not outperformed their respective benchmarks.

This poor track record appears in other research, as indicated in the graph below. This study compared the same actively managed funds in the CRSP database to the Russell benchmarks and showed similar results over the three- and five-year periods. Over the past five years, about 65% of all US equity managers failed to outperform their respective Russell Indexes, and 84% of fixed income managers failed to beat their respective Barclays Capital Indices.

Of course, the results of these studies will fluctuate over time, and a majority of funds in a given category might outperform over the short term. But the message is clear: As a group, actively managed funds often struggle to add value relative to an appropriate benchmark—and the longer the time horizon, the greater the challenge for active managers to maintain a winning track record.

1. SPIVA stands for Standard & Poor’s Indices versus Active Funds. The report covers US equity, international equity, and fixed income categories. The actively managed funds are grouped according to Lipper style categories.

2. The Center for Research in Security Prices (CRSP), at the University of Chicago Booth School of Business (Chicago GSB), is a nonprofit center that also functions as a vendor of historical data. CRSP end-of-day historical data covers roughly 26,500 stocks listed on the NYSE, Amex, and NASDAQ exchanges. The Survivor-Bias-Free US Mutual Fund Database includes a history of each US mutual fund’s name, investment style, fee structure, holdings, asset allocation, and monthly data, including total returns, total net assets, net asset values, and dividends. All data items are for publicly traded open-end mutual funds and begin at varying times between 1962 and 2008, depending on availability. The database is updated quarterly and distributed with a monthly lag.

Past performance is no guarantee of future results. This article is provided for informational purposes only and should not be construed as an offer, solicitation, or a recommendation from Dimensional Fund Advisors. Dimensional Fund Advisors is an investment advisor registered with the Securities and Exchange Commission.
©2010 Dimensional Fund Advisors. Used with permission.

Goldman Sells a Whatzit

We're sure you've all heard of the Goldman Sachs Abacus scandal, but most folks don't really understand what it means. Well, Goldman created a CDO called Abacus and sold it to its clients. But Goldman forgot to tell its clients that Abacus was designed to fail. Meanwhile, Goldman had placed numerous side bets that it would do just that. It was like "The Producers," that movie in which some dudes raise a mint to put on a show destined to bomb, intent on pocketing the investment money.

But most folks have no idea what a CDO is, what the hell is a derivative. Trust us. We have worked in (or very close to) financial services for eight years. Ask anyone to explain a default swap. Watch them stammer and bullshit. They don't know either. We can only tell you they appear to be an unholy hybrid between an insurance policy and a side bet at a cockfight.

So to help us understand what went down at Goldman Sachs, we've enlisted infamous children's book writer Nurse Noose to explain it to us as if we were five. And here it is:

GOLDMAN SELLS A WHATZIT

In the land of Maglop, just south of Canack
A rich man named Goldman McSachy-McGlack
Arrived into town with a large golden sack
It was stuffed full of whatzits and slung on his back
The foos that inhabit the land of Maglop
Watched as McSachy-McGlack set up shop
The new shop was chic, it was shiny, compelling
"What are you selling?" the foos started yelling
McSachy-McGlack smiled and answered the foos:
"Come see for yourself, you've got nothing to lose."

Inside the shop, there was box upon box
And each box was locked up with five golden locks
"What is it?" they asked, their eyes bright with greed
"It's a whatzit, that's what, and it's just what you need"
"What does it do?" asked young Cindy-lu Foo
"Well" said McSachy-McGlack "I'll tell you"
"It makes the poor rich, and it makes the rich richer
And the richest more richester, now get the picture?
Just buy one or two, put them under your bed
And leave them alone, get them out of your head
And then sell them back, and worse comes to worst
They will be worth ten times what they cost you at first"
"But" he continued "there's one caveat"
The impatient foos said in unison "what?"
"The whatzit will work only if it stays locked"
"What's in a whatzit?" the older foos mocked
"It doesn't concern you, just don't open the box
Keep it under your bed, and don't unlock the locks"
"I'll take one" said one foo "I'll take three or four"
"I'll take a dozen" "put me down for a score!"

Each foo soon had his own whatzit stash
And each knew that soon they'd be rolling in cash
So they bought foo-mobiles and they mortgaged their huts
They had foo boob jobs and foo liposucked butts
What happened next? Well, what do you think?
The whatzits, one-by-one, started to stink
They reeked to high heaven, all icky and rank
Like bungle-beast farts, that's how much they stank
The foos plugged their noses, they cursed and they swore
Til Cindy-lu Foo couldn't take anymore
She took out her whatzit and unlocked the locks
She took a deep breath and she opened the box
What was inside? Well I've got the scoop:
Each whatzit was stuffed full of snorgle-pig poop
When word got around, every foo would lament
"My whatzit portfolio aint' worth a cent!"

They soon lost their jobs, and then lost their houses.
They started to drink, they were beating their spouses
By the time they were left with no foo-pot to piss in
Goldman McSachy-McGlack turned up missin'
What happened then? It just keeps getting better
Taped to his boarded up shop was a letter
"I'm sorry you're left with nary a cent
But look on the bright side! I've made a mint!
See, to tell you the truth (and I know the truth hurts)
I placed a side bet that the Foos lose their shirts."
"The moral" it said "you should know now by heart:

A foo and his money are destined to part"

-Can O' Whup Ass
for more: http://canofwhupass.typepad.com/my_weblog/

The 4 x 4 Accuracy vs Doubt Matrix

-4-Block World
For more: http://www.4-blockworld.com/

Grand Canyon river trip video

http://www.youtube.com/watch?v=yRoP8ztiA3k

The first segment is a view of a California condor.

Banding day for the Peregrine Falcons

for live video: www2.ucsc.edu/scpbrg/nestcamSF.htm