Notes
1 Parts of this chapter were originally published as Greycourt White Paper No. 32: The Challenge of Identifying Managers Who Will Outperform (2004), coauthored with my partner, Gregory R. Friedman. The paper is available at www.Greycourt.com.
2 A better way to work with a manager like Hapless would be to give Hapless only 5 percent of the money we want to invest in a U.S. large-cap portfolio and to index the other 95 percent.
3 Voltaire supposedly remarked that a lottery is simply a tax on stupidity.
4 New York: Basic Books, 2003. Paulos's other books are also well worth looking into, especially Innumeracy: Mathematical Illiteracy and Its Consequences (New York: Hill and Wang, 2001), and A Mathematician Reads the Newspaper (Norwell, MA: Anchor Press, 1997). On the subject of innumeracy, see Chapter 4.
5 Looking at the manager-client relationship as a problem of principal-agent theory, David Swensen (CIO at Yale) has acutely analyzed the problems investors face in trying to align manager interests with their own. See David Swensen, Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (New York: Free Press, 2000) 4–6, 197, 248–292.
6 One of the best summaries of desirable and undesirable manager characteristics was produced by The Investment Fund for Foundations. See TIFF's website at www.TIFF.org.
7 See Mina Kimes, “Bob Rodriguez: The Man Who Sees Another Crash,” Fortune (June 6, 2011).
8 David Stein, Paul Bouchey, Timothy Atwill, and Vassilii ...
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