“What have you done for me lately?”

The flipside of the performance chase.

“What have you done for me lately? How dare you miss a market trend? Why aren’t we on top right now? Is something wrong? Have you lost your edge?”

The type of investor who is easily impressed by short-term performance is also really easily disappointed when a strategy struggles. It’s a personality thing. It’s what drives the behavior gap that Carl Richards talks about – getting into the next hot thing at a top and then getting out at a bottom for the hot thing after that, “repeat until broke.”

Look at Balestra Capital as a brand new example of this timeless cycle.

The fund’s manager was one of a handful of hedge fund guys that “called the crisis” and profited from the market collapse. In the aftermath of the crash, having posted a once-in-a-lifetime performance, Balestra became a hot fund. This is the same thing that happened for the rest of the crash-callers.

Only that’s not a trick that anyone can pull off twice. And so absent a follow-up miracle, the investors get bored. They get restless as other managers appear to pulling other miracles out of their asses.

“I want in on that!”

And then the drawdown comes and it’s lights out.

Check this out, via the Wall Street Journal:


All the new investors who came banging Balestra’s door down to give them money after 2007-2008 are now wondering why they bothered. As Rob Copeland reports:

Balestra Capital Partners LP, founded by Wall Street veteran James Melcher, saw investors yank more than $600 million—or more than 60% of its assets—at the end of the second quarter, according to investor documents…Due to losses and redemptions, the firm’s main fund now has under $400 million, about one-fifth of its size two years ago.

This is a fund that doesn’t appear to have made anyone money over the last five years. But you know exactly when it raised the most money and brought in the most new investors, just by looking at the chart above.

Someone running a fund somewhere is going to call the next crisis exactly right. An ocean of money will come pouring in over the transom. Unfortunately, there probably won’t be any follow-up miracle there either. But there will likely be disappointment.

Repeat until broke.


Money Manager Foiled by Bad Bets (WSJ)


This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. stuart commented on Dec 19


    ñïñ çà èíôó.

  2. Peter commented on Jan 19



  3. w88 commented on Sep 20

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2014/07/23/what-have-you-done-for-me-lately/ […]

  4. cara mendaftar pertamina commented on Nov 14

    … [Trackback]

    […] Find More on to that Topic: thereformedbroker.com/2014/07/23/what-have-you-done-for-me-lately/ […]

  5. Beretta Guns For Sale commented on Nov 26

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2014/07/23/what-have-you-done-for-me-lately/ […]

  6. mơ thấy đi chợ commented on Dec 20

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2014/07/23/what-have-you-done-for-me-lately/ […]

  7. CI-CD commented on Dec 20

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2014/07/23/what-have-you-done-for-me-lately/ […]

  8. Regression Testing commented on Dec 21

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2014/07/23/what-have-you-done-for-me-lately/ […]

  9. Study in Uganda commented on Dec 29

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2014/07/23/what-have-you-done-for-me-lately/ […]

  10. AWS DevOps commented on Feb 07

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2014/07/23/what-have-you-done-for-me-lately/ […]