There is an old saying amongst fighter pilots which is that you only take flak when you are close to the target. Equally, another truism is that a man’s opinion can always be influenced by who pays his wages. On both scores Mr Gillen’s article raises a few eyebrows. < ?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

If he has a problem with my pointing out that over 750 million of taxpayer’s money has been squandered by the NTMA and its preferred managers well so be it. However, this is a lot of money, it is your money and losses of this magnitude need to be investigated. If Mr Gillen believes that we should quietly accept this type of carryon, then he wouldn’t either managing nor advising managers of my money.

The crux of Mr Gillen’s criticism seems to be that everyone is useless at managing money. This is simply not the case. For example, the people that manage my own pension, Emergent Asset Management, generated returns of over 56% for me last year. Now that is what the game is about. A variety of currencies, bonds, stocks and commodities made plenty of money last year. I am surprised that Mr Gillen as the head of research of a stockbroker appears to be unaware of this.

Independence of thought is the key to making money and investing wisely, not following the lemmings off the cliff as seems to be his preferred approach to money management.

As someone who is an active private investor and has spent most of his career in the financial markets working for the biggest and most influential investment banks in the world, I find Mr Gillen’s comments rather bizarre. If he thinks that the priviledge of managing other people’s money can be reduced to watching benchmarks well he is entitled to his view, but I would not advise anyone to follow it.

The risk in this game is not the risk of performance vis a vis a benchmark, it is the risk of losing money in absolute terms. The fact that relative to other managers our pension funds did not do so badly is entirely irrelevant. Mr Gillen accuses me of having a rear view mirror approach when I say that the stockmarkets were clearly overvalued. If he is a regular reader of the column he will find that as far back as March 2000, this column has been saying markets were overvalued. That is foresight not hindsight. More to the point the people that have managed my own affairs thought the same way and as a result, my pension is up over 100% since March 200 not down 50% where most pensions appear to be.

In addition, Mr Gillen contends that “few can tell the future”. If that is the case why does he put himself forward as an expert. The game is not about telling the future but about assessing future and present risk. If you can’t do and feel that it is sufficient to take a fee from following the herd, well off you go. I’ll take my chances elsewhere.   Finally, it does not surprise me that a stockbroker will defend the pension fund industry with its ludicrous benchmark system, pension fund advisors and sometimes lemming-like managers, the industry does after all pay his wages.

Risk is losing money not the benchmark  


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