oildog:

I'm not.  I could have gotten a 202% return if I had just invested in POT instead.  Are you sorry you got your measly return in CGFMX instead of the 202% return? 

I am sorry I didn't get a 202% return by investing in POT.

A couple points here. Oildog likes to point out Heebner's performance since 1982 or whatever. He assumes an investor in 1982 would learn nothing over 25 years and still be the same investor in 2008. One thing for sure, I'm definitely a better investor than I was 10 years ago having learned from past mistakes. Heebner pointed out the mistakes he made when he first started out.

 2nd of all, the other fund he mentions did real well leading up to the internet bubble and collapsed during the 2000-2002 bear market. Quite frankly, any knucklehead could've done well during the mania years. I know because I did. And then the fund proceeded to collapse during the bear market. There's no skill involved in making money during a mania. What Heebner has done during both bull and bear markets requires skill. He shorted tech stocks in 2000. And he's been short financials since last year. Making 80% when the Nasdaq is going up 50% and internet stocks are going up 200% doesn't mean anything. Going up 80% while the S&P500 is only up 5%, requires some skill. Hell, Heebner has a number of 40+ percent years, even during years when the market dropped. The other funds can only manage massive gains if the market is also on fire.
 

Ajwells is right in that you can be a conservative investor and own CGMFX at the same time. I know because that describes me. I own CGMFX yet my portfolio has only half the volatility of the markets. No single fund makes up more than 8% of my portfolio. CGMFX only makes up 5%.

I do not own CGMFX but I would like to say that the post about trading cost and commissions sounds a bit silly.  The returns he has produces are NET of all of those costs.  If morningstar shows a 10 year number on a fund of 23% return, it is a net return, therefore, who cares what the costs are.  The strategy led to a 23% return.

A couple points here. Oildog likes to point out Heebner's performance since 1982 or whatever. He assumes an investor in 1982 would learn nothing over 25 years and still be the same investor in 2008. One thing for sure, I'm definitely a better investor than I was 10 years ago having learned from past mistakes. Heebner pointed out the mistakes he made when he first started out.

That's a possibility, but I don't think it's consistent with the facts.  Heebner's worst returns came in the 1990s, not the 1980s.  If this is a learning story, he first got stupid before he got smart. 

2nd of all, the other fund he mentions did real well leading up to the internet bubble and collapsed during the 2000-2002 bear market. Quite frankly, any knucklehead could've done well during the mania years.

Not really.  In fact, the late 1990s was one of the most difficult times for active funds to beat the S&P 500.  Case in point - CGMFX didn't look like much of a winner back then!  Let's see here... according to your logic, Heebner is worse than a knucklehead.  Tell my why you like this fund again?

Best,
Oildog

As far as Heebner being right on a number of calls on the long and short sides, of course he was one of the few mutual fund managers who was shorting tech before the bubble burst... and he was one of the few shorting subprime before it blew a hole in most everyones' world... and his calls on materials and energy are well known... and he has ridden the homebuilders up and down several times from my recollection... he has owned up to being late on a few themes, but most of his big calls have been right..

Which themes have you particularly noted that he was wrong about, Oildog?  Certainly the commodities bubble seems ready to burst at any moment, but we dont really know how much of those stocks he is still holding...

Ajw 

ajwells:

Certainly the commodities bubble seems ready to burst at any moment,

The gold bubble has already burst.  Oil is on its way down (at least for the short term).

Oildog,

Most of the great investors including people like Eveillard and Buffet, underperformed during the late 90's because they refused to participate in the tech mania. Knuckleheads and gamblers were the ones who made alot of money and then got burned. Incidentally, most of the underperformers including Heebner still made money even if they underperformed during the 90's.

 

jagor:

I agree 100% with OIldog on this one. There are three things I particularly dislike about CGMFX. 

The first is its almost unbelievable turnover ratio.

The second thing I dislike about CGMFX is related to the first; if Heebner is churning his $7 billion portfolio every three to four months, the commissions he is paying must be colossal 

The third thing I dislike about CGMFX is its lousy website. 

Building on this post, I also found many things to hate about CGMFX and CGMRX:

• Failure to stick to mandate in CGMRX!  Potash and Mosaic are fertilizer companies!  OK, these guys own a lot of land, but they are NOT in the real estate business.  Instead of maintaining discipline, Heebner insists on making money for his shareholders during a period when all other real estate funds have lost money. 
  

• The turnover rate is totally out of control.  Heebner needs to have a good talk with the Vanguard Diehards to understand the value of keeping expenses low!  This is one more argument in favor of indexing.
  

• Poor web site.  Instead of spending so much time focused on managing his portfolio, why doesn't the man invest in his web site?  It's insulting to shareholders who pay good money to hold his funds. 
  

Heebner could learn something from HSGFX's John Hussman, who been personally writing a lengthy letter to his shareholders each and every week starting in 2003 in order to explain why the markets are overpriced and dangerous.

• Use of shorting.  This is a high-risk technique.  Markets go up over time and this is market timing at its worst.

• Portfolio rebalancing impact!  Heebner's funds sometimes make money so fast that investors' carefully-designed allocation plans are rapidly destroyed.  Therefore investors can find themselves taking on unplanned risk.

• Tax impact!  Combining high turnover with high returns can make for some very nasty surprises on April 15! 
  

Most of the great investors including people like Eveillard and Buffet, underperformed during the late 90's because they refused to participate in the tech mania. Knuckleheads and gamblers were the ones who made alot of money and then got burned.

These are guys who are way out of Heebner's league.  Indeed, value investors like Eveillard or Buffett did not buy into tech mania.  They are also avoiding the Heebner stocks of today.  Let me know the next time Buffett buys a 70 P/E agriculture stock.  Then we'll talk.

Incidentally, most of the underperformers including Heebner still made money even if they underperformed during the 90's.

For the second time, here's the performance of CGMFX in the 1990s: link.  The fund lost 30% at one point in 1998 and ended the 1990s in the red.  Apparently, inconvenient facts won't get in the way of DonTib. 

Best,
Oildog