Chou Funds

I just thought I’d point readers to a recent article in globeinvestor about my favorite Canadian mutual fund manager Francis Chou. I like his disciplined, methodical and deep-value approach to investing and although I’m personally not a big fan of mutual funds I own, and like the Chou Associates Fund for the following reasons:

•I think Francis Chou is a seasoned pro at finding deep value before the market

•He invests in markets that I do not have the time to follow

•15yr return 15.5%

•He invests for the long term and is not concerned with quarter to quarter fluctuations

•Very methodical investing style

•MER of 1.74% (in my opinion it is worth every penny)

(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice)

Mutual Funds

Ok I’ve received a few emails about mutual funds so I just thought that I’d share my general thoughts on them. Ok investment advisors plug your ears. In general I think mutual funds are a total waste of money (2% to 3% MER makes a huge difference in the long run) additionally I don’t think that 95% of the fund managers out there are any better than a savvy amateur (because of the amount of money they have to move). I can’t remember the exact stat (and I’m too lazy to look it up) but I seem to remember that it was something like 80% of fund managers don’t beat the market.

That being said there are a few situations that I personally would buy a mutual fund.

1. If I think the fund manager is smarter than me.
2. If I want exposure to a very risky area (ie- biotech)
3. If I want exposure to a market that I don’t follow (ie-outside of North America)

Two of my favorite managers are Francis Chou and James O'Shaughnessy. I’m currently taking a hard look at O'Shaughnessy’s global fund and will probably make a purchase in the near future.