Why analysts as a group are always wrong
“Dye’s answer to his critics was simply that the market was overvalued and he didn’t want to succumb to the “bigger fool” bandwagon, particularly as the months rolled by and he may just in fact, if capitulating, be the bigger fool! During 1999, as stock markets continued to inflate and particularly in the technology arena, he came under increasing pressure from his clients and fellow management to explain just why he was underperforming so badly. At the end of 1999 his firm was ranked 66th out of 67 for performance. Dye’s answer to his critics was simply that the market was overvalued and he didn’t want to succumb to the “bigger fool” bandwagon, particularly as the months rolled by and he may just in fact, if capitulating, be the bigger fool!
TONY DYE
Dr Doom One particular analyst with whom I had a great deal of sympathy at the time was a chap who came to be known as “Dr Doom” given his bearish views — Mr Tony Dye former CIO of what was then known as Phillips & Drew (and now simply UBS). I never got the chance to meet him as a fund manager, but I was aware of his cracking track record and his value bias of investment. Unfortunately for Mr Dye, his logical views and ability to realise that stocks were wildly overvalued was ironically his downfall.
Mr Dye resigned just after the market crashed and he was ultimately vindicated as stock markets around the globe halved through to 2003. Dye started a new fund management company and went on to produce, once more, exceptional returns for his clients before sadly passing away in 2008. To me, he was a true fund manager — a man who made money through thick and thin, who stuck to his disciplines and investment beliefs and not someone who was in the right place at the right time like many of the so called “hot shot” fund managers of recent years.
NASDAQ CHART
March 2013
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