tar42:

Chin, sorry about the last post>

But getting back to the origional post and rebalancing........I feel it's important that managers have the ability to reblance in both bull and bear mkts. Maybe that's why some managers can avoid large negative returns in bear mkts by selling off equities and repositioning their holdings as 'their' reserch indicated a down turn several sectors.

Hi Tim,

As I offered, this could come from just not doing anything, and/or adding to the cash position to cover redemptions from investors running for cover. Most of the advantages for managed funds, as I have offered, for the last 8 - 10 years has been due to the fact the S&P 500 was overvalued from the NASDAQ growing to 33%+ of the S&P 500.

If Aswath Damodaran is right, it was the institutional investors who ran these prices up to bubble valuations. Some of it could have been these managers of funds needed to please their clients, just as they need to please their clients in a bear market.

Those who were not investing in tech stocks would have easily managed higher returns and lower volatility after the bubble burst. However, they suffered the image of mediocrity from Wall Street in the late 90s.

The opposite would be true in a bear market. They would go the way of the investor/client as their jobs depend on it. You cannot keep a fund going if you do not please the clients.

As with your answer to Gregory on "apples-to-apples," it would have been the other way around in 1973 - 1974. Those funds that chose to invest in small, value, Intl., and even REITs back then would have suffered more than the S&P 500. "Apples-to-apples" would have offered a different meaning then.

Chin