Some money managers step up for truth: “investment theory often plain wrong”

This article is encouraging:

“The newly created 300 Club is a group of ten preeminent investment professionals who claim their mission is to “raise awareness about the potential impact of current market thinking and behaviors and call for immediate action.”

The club is named for the legendary 300 Spartans who in accounts of ancient Greek history resisted the Persian emperor Xerxes I and his army of one million at the Battle of Thermopylae in 480BC, a reference Nusseibeh said was relevant as members “have stood up because we think it’s right and proper to stand up.”

“What we came to see was that collectively we know that a lot of the so-called theory that people use to invest is over complicated, is either misunderstood, misapplied or plain wrong.

“There’s too much complexity in the way that people invest and actually that has in our view been part of the reason that led up to the crash of 2008 and part of the reason why we are where we are now.

… The investor pool through pension funds and through other saving vehicles control a lot of the supply of investment that goes into the marketplace… they are advised by professionals who seem to have taken presumptions, turned these presumptions into what they believe is science, applied them incorrectly and then we’re surprised at the volatility that resulted.

As well as overly complex investment instruments, The 300 Club cites excessive focus on products rather than investor needs and the “presumption” that markets always rise in the long term as beliefs and practices that put pension funds in particular at risk.

Describing fund managers as “factories” solely concerned with providing “products”, Nusseibeh said the last five years had seen a total breakdown in a “fiducial responsibility” on the part of fund managers towards their clients…”

Good stuff:  read the whole article here.  There is hope after all.