Does Weed Smoking Decrease Performance

[aiki14]

	Quote:	OAC
	Fund managers in the U.S. are compensated not on how much money they have made for their clients, but based on their fund's performance as compared to the SP 500 benchmark . Another word, if the S&P index fell 15%this year and the fund only fell 10%, the fund manger can expect a large bonus, sometimes as large as 7 digits. More example of big reward for corporate incompetence is the firing of Merril Lynch's CEO this week. The firm had its biggest quarterly loss in 95 years. And the severance package for Mr. O'Neil? a whopping $160 million. Hey, may be it is a good idea to keep these MIT dudes around, because someday I may need them to help pay my children's college education.

Actually each fund uses a benchmark that has some correlation to their asset class, not necessarily the S&P. Performance against a benchmark is the only way to measure the effectiveness of management (Alpha). If the fund outperforms the benchmark index by your 5%, or in other words 5% alpha, management has earned their bonuses, even in your -10% versus -15% scenario. We use asset allocation diversification strategies to protect against down markets, calling the scenario above incompetence is not understanding the concept.
Mr. O'neill does not have a severance, he was not a contract employee. The $160-200 million is restricted stock and options bonuses he earned over 21 years as a Merrill employee in the same way every other employee of the firm does. He is not receiving a bonus for 2007 nor does his salary continue on after his date of termination. Additionally I believe he is a Harvard Alum. I am not defending Mr. Oneill, I wouldn't have put a guy who didn't come from the retail side of the house into the CEO position of the largest retail broker in the world, and I also see him as a "kiss up, kick down" kind of manager (same for Fakahany for that matter).
As an aside I played golf with my Merrill guy on monday, he is with the Private Banking and Investment Group (PBIG) and he says the brokers really like McCann as successor or Greg Fleming from the IB side.
And one thing thing I do agree with is keeping the MIT "dudes" around, as it would indicate you potentially have the assets to warrant an account at GS, and they won't even take your call without a million in AUM.

[OAC]

	Quote:	aiki14
	Actually each fund uses a benchmark that has some correlation to their asset class, not necessarily the S&P. Performance against a benchmark is the only way to measure the effectiveness of management (Alpha). If the fund outperforms the benchmark index by your 5%, or in other words 5% alpha, management has earned their bonuses, even in your -10% versus -15% scenario. We use asset allocation diversification strategies to protect against down markets, calling the scenario above incompetence is not understanding the concept. Mr. O'neill does not have a severance, he was not a contract employee. The $160-200 million is restricted stock and options bonuses he earned over 21 years as a Merrill employee in the same way every other employee of the firm does. He is not receiving a bonus for 2007 nor does his salary continue on after his date of termination. Additionally I believe he is a Harvard Alum. I am not defending Mr. Oneill, I wouldn't have put a guy who didn't come from the retail side of the house into the CEO position of the largest retail broker in the world, and I also see him as a "kiss up, kick down" kind of manager (same for Fakahany for that matter). As an aside I played golf with my Merrill guy on monday, he is with the Private Banking and Investment Group (PBIG) and he says the brokers really like McCann as successor or Greg Fleming from the IB side. And one thing thing I do agree with is keeping the MIT "dudes" around, as it would indicate you potentially have the assets to warrant an account at GS, and they won't even take your call without a million in AUM.

Thank you for trying to educate me. I have a MBA and used to work for a Wall Street firm