Juggling Dynamite

Kevin O’Leary surfed the wave of his TV notoriety to attract money into the funds he launched just after the market crash in 2008. And he was very successful at bringing in more than a billion in capital via the sales distribution channel–paying brokers to funnel him unsuspecting client capital.

The buzz circulated and perpetrated by O’Leary himself (aided and abetted by the CBC who were desperate for business ratings) was that O’Leary was an investment genius because he said that he “sold a software company and made billions of dollars”. Actually this was very far from the truth. See more here:  What is the origin of O’Leary’s billionaire moniker.  Also see:   TV’s shark tank guru:  in real life, no business whiz

I wrote about my own personal experience and impression of O’Leary here last October.

But regardless of how much money he really had or has, the truth is that O’Leary is a fantastic salesman but woefully inept at the real life risk management of other people’s savings.  Thank heavens retail investors are finally waking up.  See:  Investors redeemed 500 million in O’Leary funds in 2011:

I guess the idea of Getting Paid to Wait may not be all that worthwhile if you’re not even gettin’ paid while you’re doing all of that friggin’ waiting! At least not solely out of profits, that is (see prior post “O’Leary: ‘We have never dipped into the principal‘” June 7-11).

I’ve just had a chance to peruse the 2011 financial statements for the various mutual funds and closed end investment vehicles managed by our man Kevin O’Leary, Canada’s Rock Star asset gatherer. Across the board, it seems that some investors are starting to walk, briskly, to the exits. By my count, KO’s various funds suffered more than $498 million of redemptions in 2011, which works out to be about 24% of all of the funds under KO management. At that rate, unless he can continue to raise new funds to replace the assets that he’s losing, Mr. O’Leary won’t have anything left to manage by the time his infamous “Decade of Daddy” comes to an end (hat tip – Globe & Mail).

Pimco’s Mark Kiesel and Gary Shilling debate US housing prices. Housing is an example of how the downdraft of bubble excess has a gravity greater than all the government intervention to stop the natural, inevitable course of mean reversion. One of these days, politicians and bankers will have to stop wasting public coffers to arrest the price clearing needed to restore health and value to asset markets. And then we will see the best investment opportunities in 30 years. It is coming… Here is the direct link.

More on the real life harm stemming from the insistence to maintain the status quo ideology of a common currency in the Eurozone. I think the most helpful perspective on present conditions is not to think that the economy will collapse if the Eurozone disbands, but rather that the economy has already collapsed under the weight of reckless spending and debt. Admitting this is a failed model is the first step to true reform and finally a path to meaningful recovery. Here is a direct link.