The other day I found myself paying attention to one of those desperate fund managers, looking forlornly at his dwindling bonus as the prospect of redemptions weighed heavily on his fund. This was his golden chance to prove his worth.
“I am cautiously optimistic about future growth,” he says.
Here we go again, the same patter that normally results in me taking a long snooze.
If stocks go down the pan or rise through the roof, all those cautiously optimistic fund managers will take credit for being right. But you have told me nothing Mr Fund Manager. In fact, the next time I hear the phrase cautiously optimistic
I am going to scream.
The problem with the phrase is that it implies the fund manager knows what is going on when really he does not and never did, it just looked like he did when everything was going up. It is just too dangerous to say, “I do not know.” But that is the truth, the fund manager does not. The search for value is a search for illusory knowledge. The future is unknowable and value is only really known after the event.
We are not easily persuaded any more and are not the soft target we once were. You are the one looking like a salesman now and must catch up or you will be out on your ear. We know you need to sell funds no matter what the outlook.
The danger is that you are increasingly relying on execution-only platforms for fund sales – platforms that also only survive through fund sales.
The problem here is that you now have access to the general public with this expert drivel and more often than not, it all ends in tears. All sense of risk is lost when we buy into the illusory high.
The phrase cautiously optimistic itself is a nonsense, caution defeats the purpose of optimism. You are either optimistic or you are not.
Cautiously optimistic is a don’t know phrase packed with endorphins, an allpurpose, meaningless qualifier to keep the so-called expert from looking stupid.
But can you imagine us saying the same to our clients, or explaining it to the FSA when the outcome is not quite what we had hoped?
Tell it to me straight. There are a few of you who do and I respect you for that but we need more of you.
Mel Kenny is a chartered financial planner at Radcliffe & Newlands