ClemG:

Why do all you folks who invest in this fund feel the need to defend it with so much enthusiasm? If your completely happy with it and believe Heebner is the investing God so many want to make him out to be, then why should anything oildog or anyone else says about it even matter to you? 

You could also reasonably ask why Oildog is on such a crusade to trash a good fund.  Sure, it's volatile, and now may not be a bad time to get in, but a simple warning that the fund is not for inexperienced investors is good enough.  Maybe he owned the fund and got burned because he didn't manage his position adequately and now is on a crusade to "save" other investors.  While that motive may be noble, it is not neccessary.  

No need to get personal here, guys!  This is a risk/reward issue; you don't get rewarded unless you're willing to take risks.  CGMFX has handsomely rewarded its investors - so far.  Will that continue in the near term?  Who knows?  Will it continue forever?  Not bloody likely!  Oildog feels that the potential reward is overshadowed by the risk.  He may be right.  But he could also be wrong.  If any of us actually KNEW what was going to happen ahead of time, we wouldn't need a fund manager to figure things out for us.

At the end of the day, you lay your bets and hope the wheel stops at a good spot.  If you bet red you have a better chance of winning something than if you bet red 5, but if you hit red 5, the payout is a lot bigger.  Fortunately, investing isn't quite as random as a roulet wheel, but the principle is the same - You decide how much you're willing to lose, you do your best to maximize your chances of success, and you act accordingly.  Where things go south is when an investor DOESN'T consider the potential for losses, set a limit, analyze the risks, or minimize them as much as possible.  Then, when things go wrong (note: not IF), the investor overreacts.  Plan for the worst, hope for the best.

Norbert,

I wasn't trying to single anybody out, I was just saying there seems to be an awful lot of people who find themselves having to defend thier investment in Heebner. If a person is happy with it and made lots of money well that's great, that's all that should matter. I know for a fact that if I would have been around here back in 1999-2000 and I would have understood value investing the way Oildog does and practiced it I'd have a lot more money then I do now. All I did was chase hot funds and then sold them all for hot stocks and lost practically all my money (no joke). When people recommend CMGFX to new investors and those new investors chase the fund like I did those stocks, they may very easily get burned like I did. I'm a much smarter more realistic investor now. I consider myself a value investor, but I only invest in a few funds. Back then everybody was making money and I kinda lost touch with reality and thought I knew what I was doing. Reality soon set in and I had no freaking clue what I was doing. Luckily I can say I learned a very important lesson that will stick with me the rest of my life. I think Oildog is trying explain to people why they should be cautious with this fund so they don't end up like I did.

If CGMFX went up in 98-99, proving oildog wrong, simply point out that CGMFX went down big during one quarter.

From inception in September 1997 through December 1999, the fund lost money.  This contradicts your claim that the fund made money in the 1990s.  It did not.  Now that you've been shown to be incorrect, you change the criteria to "1998-1999."  Really brilliant. 

Or if CGMFX went up during the 2000-2002 bear market, simply point out how LOMMX went down big during 2000-2002. You see the pattern here?

At what point in this conversation did I point out that LOMMX went down during 2000-2002?  Apparently your disregard for facts extends to what other people are saying.  

Guess what? Had I sold CGMFX at the bottom like oildog suggested a few months ago, I would've lost money. But because I held, I'm making money and easily outperforming the market this year.

I've been consistently critical of this fund regardless of what the fund NAV is doing.  Whether or not to sell is obviously your decision.  I'm critical of lotto tickets as well, and I'm sure there are some who've won big during the past couple of months.  That doesn't make my criticism invalid. 

Best,
Oildog

The lady doth protest too much, methinks.  Heebner's CGMFX is n° 1 in its category over a 10 year period.  The guy's doing something right.

The returns for a fund like this don't tell us very much.  The fund is inherently high volatility, and the guy is making broad sector bets.  During the past 10 years, it looks to me he made about four or five leveraged sector bets.  10 years sounds like a long time, but you could get four or five bets consecutively right out of pure luck.  It's certainly possible the guy has skill (a possibility that I've noted repeatedly), but the returns evidence doesn't allow us to draw strong conclusions either way.  That's why I'm drawing comparisons to funds like White Oak - you can shoot the lights out with this kind of strategy even if your long-run expected returns are quite low. 

For example, Potash and Mosaic certainly have high PEs, but M* puts fair value well above the current price for both of these companies. FWIW.  That's for the simple reason that fertilizer profits are soaring on high demand and limited supply.

I wouldn't put too much credence in M* fair value estimates.  They were pretty liberal about tech stock fair values during the bubble too.   

 
Your completely negative take on Heebner seems a bit excessive to me. He's running the most successful growth fund on the planet. Give the man some credit.

I think I'm giving him plenty of credit.  I've said repeatedly that he's likely to produce outperformance over the long-run, albeit with extreme volatility.  That's not something any ordinary joe can pull off.  
 

You could also reasonably ask why Oildog is on such a crusade to trash a good fund.  Sure, it's volatile, and now may not be a bad time to get in, but a simple warning that the fund is not for inexperienced investors is good enough. 

Hi MasterPlan, I'm doing this because I've been around long enough to have a certain sense of history.  The standard warning that the fund isn't for inexperienced investors hasn't been enough.  We're seeing a large number of posters touting this fund unconditionally & the fund is showing up in many first-time portfolios of novice investors.  We saw the same thing a few years ago with focused value funds, but at least there the downside was fairly limited.  This one is a lot more like the tech funds - people are likely to get burned very badly.  Most investors can't tolerate 50%+ drops or decade-long underperformance.  They're likely to sell after heavy losses.  That's a guaranteed way to lose money.  If a few beginning investors avoid this trap after reading what I'm writing, my task will have been accomplished. 

Incidentally, I don't expect many to listen.  I started warning people about REITs and housing in late 2005, and 95% of responses were basically along the lines of "you have got to be crazy, look at the performance numbers!"  You're always going to be a lonely voice when you're going against the tide. 

 
Maybe he owned the fund and got burned because he didn't manage his position adequately and now is on a crusade to "save" other investors.  While that motive may be noble, it is not neccessary. 

I've never owned CGMFX or any Heebner funds, and I never will.   

Best,
Oildog

You are absolutely right, Oildog! 

As we all know, most investors are motivated by the two emotions of fear and greed.

It has been my experience that the "aggressive investors" [i.e. the greedy ones] quickly turn into "scairdy cats" [i.e. the fearful ones] as soon as their fantastic funds drop 20 or 30% and, of course, they bail out at a loss.  All one need do to verify this is check the statistics for the 2000-2002 crash.

We would all be better off in the long run by adopting Aristotle's ethic and exercising "Moderation in all things."

Jagor 

I love Oildog ripping into funds I own or am considering... he is absolutely right with many of his points and a contrarian view is always appreciated... I agree with most of what he says about CGMFX but will continue to hold a position until it gets way beyond 10% of my mix or Heebner retires or otherwise leaves the fund... and if we have enough days like today where the market is flat and the fund is up 4% it might be time to rebalance sooner than I had imagined

Ajw 

If a few beginning investors avoid this trap after reading what I'm writing, my task will have been accomplished. 

I don't consider myself a beginning investor but as mentioned above I messed up really really bad during the tech bubble and learned some valuable lessons. I for one appreciate what your saying and are  trying to accomplish. Clem