The AFR is reporting this morning that Gerard Minack is leaving Morgan Stanley to start his own newsletter. Going it alone should not be an issue for Minack, as his parting shot attests:
He bemoans the rise and rise of how short-sighted financial markets have become and gives an insight into what he calls the industry’s “dirty little secret’’.
“The average professional underperforms. Investors would be better off buying the index as more often than not, that would beat the pros. What other profession is there where amateurs can beat the pros? If we played tennis against [Roger] Federer we wouldn’t win a point. If we played a round of golf with Tiger [Woods] we’d lose. Voters get the politicians they deserve and we get the fund managers we do because people give them money,’’ Minack points out.
But people don’t just index their money. They go performance-chasing which reinforces the short- termism in markets. The secret of investing is buying low, selling high and not buying high and hoping it goes higher he says.
…“Unbelievably we’re repeating the same cycle all over and expecting a different outcome. That’s not to say you can’t own equities but own them knowing it’s all going to end in tears,’’ he says.
…“My view is, it’s not imminent, it’s not this week’s story, but let’s give this whole process another year of low rates, and loose liquidity and increasing mispricing of risk, and further scope for increased leverage, and we’ve potentially getting quite fragile again.”
Spot on. The word is Minack will be targeting his new product at institutional clients, who certainly need the macro advice. The product will be launching in August, after Minack enjoys a well earned break.
