Fleeced by a fool — how bloomberg markets magazine knowingly used deceiving statistics in a hit piece _ peter brandt – factor trading equity meaning in urdu


The October 7, 2013 Bloomberg Markets Magazine hit piece “ How Investors Lose 89% of Gains from Futures Funds,” by David Evans, contains more gross inaccuracies and questionable statements than can address in this brief rebuttal.

But, the bottom line is this: Evans is guilty of journalistic misrepresentation, agenda-driven word-smithing, statistical deception and a dishonest presentation of facts.

Journalistic misrepresentation. Pound exchange rate Some industry leaders quoted in the story have confirmed to us that Evans made no mention of the fact he was a reporter preparing a story. Us to euro exchange rate These same people are overwhelmingly outraged and shocked over the disparaging, one-sided and out-of-context statements that the story attributed to them. Eur usd converter Widely accepted journalistic etiquette

requires that reporters honestly present themselves and their intentions.

Agenda-driven word-smithing. Chf usd exchange rate Such wording and selective quotes as “fleeced by fees,” “return-robbing fees,” “escaped the notice…of regulators,” “license to steal,” “it’s a racket,” “hype by brokers” and the like would suggest that this story was written before it was even researched.

Statistical deception. Usd to cop exchange rate The main theme of the article is that excessive fees have robbed investors of their gains. Binary bingo We completely agree with the author that fund charges of 6% to 9% of assets are excessive. Call option But, the statistical fabrication of data in the story is dishonest and deceptive.

To simplify the author’s cunning statistical slight-of-hand, consider the following example. Binary dictionary Assume that Fund A doubled its investors’ capital (after-all-expenses) over a five-year period in which the average Fund assets were $100 million. Html editor freeware Thus, Fund A made its investors a net $100 million.

During the subsequent five years the assets under management exploded to an average of $1 billion, during which time Fund A’s net performance (after all fees) was zero. Eur usd rate forecast No investor lost money. American futures market No investor made money. Decimal calculator that shows work However, the commission to equity ratio of 2% (not unusual in managed futures) resulted in brokerage expenses during the five year period of $100 million. Euro today exchange rate Additionally, Fund A’s 2% management fee equaled a similar $100 million of expenses. Exchange rate pound to us dollar Thus, the total expenses for second five year period were $200 million.

So, while investors over the full 10-year period doubled their capital, and investors over the last five years broke even, Evans would claim that Fund A’s excessive fees not only consumed all of the initial five years of profits but also robbed investors of another $100 million during the second five year period. Usd cad fx Rather than presenting a slight-of-hand and confusing dollar amounts not connected to the amount of underlying assets, net rates-of-return data should have been presented.

According to Evans’ logic, a strawberry farmer who sells his harvest at $85 per cwt. Aud usd exchange rate forecast only to have it retail at $240 per cwt. Equity finance jobs would be robbed of $155 per cwt.

It is astonishing to us that a sophisticated financial organization such as Bloomberg would allow such mathematical counterfeit to be published. Futures market history The only reason “responsible” editors would allow the publishing of such mathematical manure is if a management decision has been made to attack a certail investment category.

Dishonest representation of the facts. Usa today high school football rankings 2016 The story calls into serious question the integrity of data from Barclay Hedge, a primary source of performance statistics used by the managed futures industry. Us futures exchanges Evans claims that the Barclay data does not include the fees he falsely claims were responsible for the grand theft of investors’ capital. European stock market futures We compared hundreds of performance data points from Barclay Hedge for the components of the BTOP 50 (the index representing the industry’s largest managed futures funds) with the actual net-of-all fees performance reported to investors by the BTOP 50 funds. Usd stock In no case did our examination find material differences – meaning that the Barclay Hedge performance data points we checked were all after fees and commissions.

The story’s comparison of managed futures to the equity and fixed income markets was equally deceptive. 1111 binary Comparing the S&P to managed futures for the decade ending 2012 is a very convenient time period if one is trying to demonstrate the underperformance of the latter. Is the futures market open This date range conveniently eliminates the 2000-2002 bear market in equities. Euro 2016 today match If, instead, the article had been written three years ago reflecting a decade ending in 2009, an even more extreme opposite conclusion could have been implied with BTOP50 up a cumulative 85% with the S&Ps down 9%.

But, any analysis so dependent upon a start date, including the one just presented favoring managed futures, is meaningless and misleading. Bloomberg stock futures market A better comparison would match the cumulative performance of the S&Ps vs. Yahoo futures indices the BTOP50 over the last ten 10-year time frames. Cad usd exchange rate Using this approach, the commodity fund managers have ranged from underperforming equities by 75% to outperforming equities by 111%, depending on the starting year for the 10-year period. Stock market futures fair value The average of the last ten 10-year periods is a toss-up, with the BTOP50 at 97% and the S&Ps at 86%.

Managed futures have proven to be a sound alternative investment uncorrelated to equity returns. Cnn market futures The Bloomberg story completely discounts the many benefits managed futures have brought and will bring to the overall investment portfolio of sophisticated investors. Xag usd Managed futures are not for everyone. Aed to usd But a good starting point for examining managed futures would be an honest representation of facts.

The graph below shows the NAV of a $1,000 investment in the BTOP50 vs. Cad to usd conversion rate the S&Ps (with dividends during the past 15 years. Cnn premarket futures stocks markets Only with the historic rally in equities over the past few years is the S&P in a leading position. Cnn futures market But note the volatility of growth curve of each asset class.

I am writing this response to Bloomberg’s Blooper because I am a defender of futures trading. Aus usd I am also a believer in managed futures, and have placed a significant amount of my own personal capital with other traders to compliment my own proprietary trading operations.

There is no doubt that the managed futures asset class has struggled in recent years. Currency converter jpy to usd In fact, the rolling 24-month ROR of the BTOP50 is approach a record low level and has been below zero for 13 straight months. Usd to zambian kwacha Yet, it is not unusual for managed futures to negatively correlate with the equity markets. Binary search in c Managed futures performance was outstanding during the 2007/2008 collapse of the U.S. Exchange rate usd euro stock market.

Good and bad performance cycles come and go in all asset classes. Us to inr exchange rate today But during it all, it would be wonderful to expect honest reporting by the financial press. Free language translation Bloomberg Markets Magazine has failed in this regard. Usd cad exchange rate history In the process, Bloomberg has not done itself, the financial industry or the concept of integrity any favor.