Larry beats the S&P 500.

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J G Bankerton
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Larry beats the S&P 500.

Post by J G Bankerton »

Opinion: Proof that you can outperform with the right actively managed stock fund

Larry Puglia, the manager of TRBCX, has out performed the S&P 500 for 27 years. If The Oracle of Omaha had bet against him instead of 20 hedge funds he would have lost. I found this fund in my son’s 401K. When we were setting up his investments, he insisted on buying some TRBCX instead of only the S&P 500 offering. He is all stock because it is a long way to 2050. I looked at TRBCX, it is a managed fund that he pays 0.57% in fees; his 401k gets an instructional class.

After a few years I’m thinking he was right and I should get on board. Should I sell all my VXUS, foreign stock? I’m finally even after holding VXUS for too many years. I would use the proceeds to buy TRBCX investor shares, the fees are 0.67%.

TRBCX fact sheet

Comparison of Vanguard 500 Index Admiral shares and T. Row Price Blue Chip Growth fund.

The only problem I see is Larry may be retiring; he says he isn’t though.
In April, Puglia took on an associate manager, Paul Greene, but says he has no plans to retire
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Re: Larry beats the S&P 500.

Post by retired@50 »

As a Boglehead, I'd only be willing to commit a small portion of my equity money to an actively managed fund. Your mention of selling all foreign holdings to get on board seems dangerous to me, unless of course your foreign holdings are a small portion of your equity. Best of luck.

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Re: Larry beats the S&P 500.

Post by mrspock »

Did he out perform for "27 years"? See portfolio visualizer. Looks like he bet heavy on tech and rode that the last decade, otherwise pretty neck-and-neck for the prior 15 years.

And took a bit more risk to do it. The problem with this sort of thing is, ok say I have a $1-2m portfolio, I ride this up to $2-3m, but suddenly he's now under performing....10 years go by... he's retired now, there's some new guy managing the fund now. I'm now almost back where I would be if I just sat with the S&P 500, then I want to switch to the S&P 500, oh shoot! I need to now pay long term capital gains taxes, anywhere from 20-30% on the gains. There's a good chance after taxes I'm now behind. In fact, with that much capital gains due, you might even wait longer than 10yrs, digging an even deeper hole.

No thanks...
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Re: Larry beats the S&P 500.

Post by anon_investor »

How does it compare to a low cost growth index fund (VUG has an expense ratio of only 0.04%).
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Re: Larry beats the S&P 500.

Post by mrspock »

anon_investor wrote: Wed Jun 17, 2020 7:39 pm How does it compare to a low cost growth index fund (VUG has an expense ratio of only 0.04%).
It beats VUG.... but barely. Note: Different time horizon as VUG hasn't been around as long.

I suspect if you look at risk adjusted returns they are darn close.
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Re: Larry beats the S&P 500.

Post by anon_investor »

mrspock wrote: Wed Jun 17, 2020 7:41 pm
anon_investor wrote: Wed Jun 17, 2020 7:39 pm How does it compare to a low cost growth index fund (VUG has an expense ratio of only 0.04%).
It beats VUG.... but barely. Note: Different time horizon as VUG hasn't been around as long.

I suspect if you look at risk adjusted returns they are darn close.
How about versus VIGRX (investor share class of the mutual fund version of VUG) which has a longer history.
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Re: Larry beats the S&P 500.

Post by MotoTrojan »

anon_investor wrote: Wed Jun 17, 2020 7:44 pm VIGRX
Since 1993 it has a 1% CAGR improvement over VIGRX.

https://www.portfoliovisualizer.com/bac ... ion2_2=100

I would put my money on QVAL beating them both over the next 20 years.
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Re: Larry beats the S&P 500.

Post by CardioMD »

We actually are 100% TRBCX in my wife’s 401(k). It was the only thing worth anything and, I agree, it has done well. We will be moving it to FXAIX when we are able to roll it to Fidelity. Until then, fingers crossed Larry can keep it up.
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Re: Larry beats the S&P 500.

Post by wandering_aimlessly »

Definitely feels like the S&P 500 isn't the best benchmark - but someone more familiar with the risk profile could comment better. It seems like a comparison to a more risk adjusted benchmark looks like the out performance is smaller and concentrated in the last 3-5 years. Out performance for that period is not so unusual - the more valuable question is: could you have looked at this fund around 2010-2012 years and been able to tell it was almost ready to take off? If you can identify who is going to outperform (even over a relatively short period of time) before they outperform - then you have something special (I certainly can't) - and there is no way I can count on strong performance over that short a time period and use that to predict future performance. I'll stick with my boring indexing.
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Re: Larry beats the S&P 500.

Post by RTF »

I also have TRBCX in my 401k and have been happy with the results. I was thinking of simplifying and just going all VIIIX but just can’t bring myself to sell when it’s performing like it has for so long. Another one that has been doing well is TRPs Small/Mid cap growth fund. It’s funny you mentioned selling VXUS as well. I had a very small amount (less than 1%) and pulled the trigger on selling, now I’m all VOO/VIIIX, TRBCX and TRP Small/Mid cap growth.
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Re: Larry beats the S&P 500.

Post by unclescrooge »

wandering_aimlessly wrote: Wed Jun 17, 2020 8:10 pm Definitely feels like the S&P 500 isn't the best benchmark - but someone more familiar with the risk profile could comment better. It seems like a comparison to a more risk adjusted benchmark looks like the out performance is smaller and concentrated in the last 3-5 years. Out performance for that period is not so unusual - the more valuable question is: could you have looked at this fund around 2010-2012 years and been able to tell it was almost ready to take off? If you can identify who is going to outperform (even over a relatively short period of time) before they outperform - then you have something special (I certainly can't) - and there is no way I can count on strong performance over that short a time period and use that to predict future performance. I'll stick with my boring indexing.
If it's a tech heavy fund shouldn't the benchmark be QQQ?
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Re: Larry beats the S&P 500.

Post by nisiprius »

I think you mean "Larry has beaten the S&P 500."
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Re: Larry beats the S&P 500.

Post by rob »

Look back in the past to people who beat the index for x years [even ignoring the compare of return without adjusting for risk - which is silly]... Where are they now?
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Re: Larry beats the S&P 500.

Post by whodidntante »

Maybe Larry has the secret sauce. I wouldn't bet on it. The vast majority of fund managers do not outperform the style they invest in. Sometimes they really hit a slump.

If you want to invest in large cap growth, go ahead. But I would pick a cheaper fund so you can at least get the style return, guaranteed.

For what it's worth, I also have access to blue chip growth institutional shares. My current investment in the fund is $0 and will remain so.
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Re: Larry beats the S&P 500.

Post by Ben Mathew »

Bubbles are the oldest story in investing. Some asset gets overvalued, so it outperforms everything else. Some people take note and start buying. Prices go up even more. Asset has outperformed again. Theory is confirmed. More pile in. The cycle continues for a while. But like any pyramid scheme, it requires an endless stream of new people buying in. Eventually you run out of new people who want to play the game. The price falters. Some people sell. Price goes down. People panic and run for the hills. Price crashes.

There has to be a part of your decision process that prevents you from buying into bubbles. For me, it's a focus on earnings, not past performance. So it's value over growth for me. Even if recent performance is poor. Especially if recent performance is poor.
Last edited by Ben Mathew on Wed Jun 17, 2020 11:34 pm, edited 1 time in total.
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Re: Larry beats the S&P 500.

Post by reln »

J G Bankerton wrote: Wed Jun 17, 2020 7:27 pm Opinion: Proof that you can outperform with the right actively managed stock fund

Larry Puglia, the manager of TRBCX, has out performed the S&P 500 for 27 years. If The Oracle of Omaha had bet against him instead of 20 hedge funds he would have lost. I found this fund in my son’s 401K. When we were setting up his investments, he insisted on buying some TRBCX instead of only the S&P 500 offering. He is all stock because it is a long way to 2050. I looked at TRBCX, it is a managed fund that he pays 0.57% in fees; his 401k gets an instructional class.

After a few years I’m thinking he was right and I should get on board. Should I sell all my VXUS, foreign stock? I’m finally even after holding VXUS for too many years. I would use the proceeds to buy TRBCX investor shares, the fees are 0.67%.

TRBCX fact sheet

Comparison of Vanguard 500 Index Admiral shares and T. Row Price Blue Chip Growth fund.

The only problem I see is Larry may be retiring; he says he isn’t though.
In April, Puglia took on an associate manager, Paul Greene, but says he has no plans to retire
Performance chasing.
Anchoring.
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Re: Larry beats the S&P 500.

Post by nisiprius »

So Larry Puglia (I'm not on a first-name basis with the man) has beaten the S&P 500 (yellow) in TRBCX (blue).

And Vanguard Primecap, VPMCX (orange) has beaten TRBCX. Just sayin'.

And I, in Vanguard Total Stock (green) have been beaten by all three, including the S&P 500. And I'm cool with that, and sticking with Vanguard Total Stock, because it's good enough and has done everything I needed for it to do.

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Re: Larry beats the S&P 500.

Post by marcopolo »

Over any period of time there will be some number of funds that beat their benchmark. Such funds are easy to identify after the fact. The real challenge is to identify them in time to benefit from it. Anyone remember Bill Miller's Legg Mason Value Trust. Soundly beat S&P, until it didn't.
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Re: Larry beats the S&P 500.

Post by Ferdinand2014 »

J G Bankerton wrote: Wed Jun 17, 2020 7:27 pm Opinion: Proof that you can outperform with the right actively managed stock fund

Larry Puglia, the manager of TRBCX, has out performed the S&P 500 for 27 years. If The Oracle of Omaha had bet against him instead of 20 hedge funds he would have lost. I found this fund in my son’s 401K. When we were setting up his investments, he insisted on buying some TRBCX instead of only the S&P 500 offering. He is all stock because it is a long way to 2050. I looked at TRBCX, it is a managed fund that he pays 0.57% in fees; his 401k gets an instructional class.

After a few years I’m thinking he was right and I should get on board. Should I sell all my VXUS, foreign stock? I’m finally even after holding VXUS for too many years. I would use the proceeds to buy TRBCX investor shares, the fees are 0.67%.

TRBCX fact sheet

Comparison of Vanguard 500 Index Admiral shares and T. Row Price Blue Chip Growth fund.

The only problem I see is Larry may be retiring; he says he isn’t though.
In April, Puglia took on an associate manager, Paul Greene, but says he has no plans to retire
10% of the holdings are international for what it’s worth. I think it is not correct to compare a large cap growth fund to a large cap blend fund such as the S&P 500. This is a classic game to make the fund look better. FSPGX is Fidelity’s large cap growth index fund. Newer than TRBCX, but since inception at 3 years (Choose timeframe at bottom), the performance is virtually identical. Growth has outperformed value the last several years. The fund is nothing special.

https://fundresearch.fidelity.com/fund- ... GX%2CTRBCX
Last edited by Ferdinand2014 on Wed Jun 17, 2020 9:57 pm, edited 1 time in total.
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Re: Larry beats the S&P 500.

Post by J G Bankerton »

retired@50 wrote: Wed Jun 17, 2020 7:31 pm As a Boglehead, I'd only be willing to commit a small portion of my equity money to an actively managed fund. Your mention of selling all foreign holdings to get on board seems dangerous to me, unless of course your foreign holdings are a small portion of your equity. Best of luck.
VXUS is 9.44% of my stock holdings; it was 20% but I stopped buying. I now have a positive 2.98% long term gain. VXUS pays a high dividend wile TRBCX pays very little. I don't need earnings as I'm trying to keep my taxes low.

If I trade all my VXUS for TRBCX, TRBCX will be 13.7% of my stock holding.
rob wrote: Wed Jun 17, 2020 8:46 pm Look back in the past to people who beat the index for x years [even ignoring the compare of return without adjusting for risk - which is silly]... Where are they now?
Larry has been doing it for 23 years and he is still a VP at T Row Price.
Ben Mathew wrote: Wed Jun 17, 2020 9:22 pm There has to be a part of your decision process that prevents you from buying into bubbles. For me, it's a focus on earnings, not past performance. So it's value over growth for me. Even if recent performance is poor. Especially if recent performance is poor.
Larry's bubble has been around for 23 years, I don't want or need earnings so the low dividends appeal to me.
nisiprius wrote: Wed Jun 17, 2020 8:36 pm I think you mean "Larry has beaten the S&P 500."
Yes he has for 23 years.
unclescrooge wrote: Wed Jun 17, 2020 8:21 pm If it's a tech heavy fund shouldn't the benchmark be QQQ?
It is tech heavy now but the prospectus doesn't limit Larry to that sector. The fund has a 30% turnove a year.
wandering_aimlessly wrote: Wed Jun 17, 2020 8:10 pm Definitely feels like the S&P 500 isn't the best benchmark - but someone more familiar with the risk profile could comment better. It seems like a comparison to a more risk adjusted benchmark looks like the out performance is smaller and concentrated in the last 3-5 years.
Morningstar puts it in Large Growth category. I use the S&P 500 because it is the mother of all benchmarks. That is the benchmark T Row Price uses also.
nisiprius wrote: Wed Jun 17, 2020 9:38 pm So Larry Puglia (I'm not on a first-name basis with the man) has beaten the S&P 500 (yellow) in TRBCX (blue).

And Vanguard Primecap, VPMCX (orange) has beaten TRBCX. Just sayin'.
VPMCX is closed. :(
Larry has improved and has beat VPMCX over the last 10 years.
Last edited by J G Bankerton on Wed Jun 17, 2020 10:21 pm, edited 1 time in total.
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Re: Larry beats the S&P 500.

Post by 1789 »

nisiprius wrote: Wed Jun 17, 2020 9:38 pm So Larry Puglia (I'm not on a first-name basis with the man) has beaten the S&P 500 (yellow) in TRBCX (blue).

And Vanguard Primecap, VPMCX (orange) has beaten TRBCX. Just sayin'.

And I, in Vanguard Total Stock (green) have been beaten by all three, including the S&P 500. And I'm cool with that, and sticking with Vanguard Total Stock, because it's good enough and has done everything I needed for it to do.

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Image
Steven Wymer from Fidelity beat them all with the final sprint over the last mile of the race. :P

https://www.portfoliovisualizer.com/bac ... ion3_3=100
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Re: Larry beats the S&P 500.

Post by Mountain Doc »

mrspock wrote: Wed Jun 17, 2020 7:36 pm Did he out perform for "27 years"? See portfolio visualizer. Looks like he bet heavy on tech and rode that the last decade, otherwise pretty neck-and-neck for the prior 15 years.
My thoughts exactly. This is a good example of why looking at returns this way (3 year, 5 year, 10 year, etc) creates a bias in the data that significantly overweights recent performance.

OP - Had you been looking at the fund's performance from 1995 to 2008, would you have bought the fund in 2008 before all the outperformance began? No, you would have figured that fund was just another closet index fund.

Winners are only easy to pick in hindsight.
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Re: Larry beats the S&P 500.

Post by Elysium »

J G Bankerton wrote: Wed Jun 17, 2020 7:27 pm Opinion: Proof that you can outperform with the right actively managed stock fund

Larry Puglia, the manager of TRBCX, has out performed the S&P 500 for 27 years. If The Oracle of Omaha had bet against him instead of 20 hedge funds he would have lost. I found this fund in my son’s 401K. When we were setting up his investments, he insisted on buying some TRBCX instead of only the S&P 500 offering. He is all stock because it is a long way to 2050. I looked at TRBCX, it is a managed fund that he pays 0.57% in fees; his 401k gets an instructional class.

After a few years I’m thinking he was right and I should get on board. Should I sell all my VXUS, foreign stock? I’m finally even after holding VXUS for too many years. I would use the proceeds to buy TRBCX investor shares, the fees are 0.67%.

TRBCX fact sheet

Comparison of Vanguard 500 Index Admiral shares and T. Row Price Blue Chip Growth fund.

The only problem I see is Larry may be retiring; he says he isn’t though.
In April, Puglia took on an associate manager, Paul Greene, but says he has no plans to retire
OP,

How many years out of that 27 were you invested in the fund? assuming you were. The trouble is not finding an active manager who has outperformed their indexes in the past, but in finding them ahead of time where they still have time left and asset base is still low.
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Re: Larry beats the S&P 500.

Post by J G Bankerton »

1789 wrote: Wed Jun 17, 2020 10:13 pm Steven Wymer from Fidelity beat them all with the final sprint over the last mile of the race. :P
Closed to new investors, so it looks like TRBCX is the only one open to new investors. Why are FDGRX and VPMCX closed, are they only for investors with $10 million liquid to invest? I have heard about these funds.
Mountain Doc wrote: Wed Jun 17, 2020 10:27 pm OP - Had you been looking at the fund's performance from 1995 to 2008, would you have bought the fund in 2008 before all the outperformance began? No, you would have figured that fund was just another closet index fund.
Larry has improved and he is open to new investors. It's only going to be 13.7% of my stocks.

My son asked what the Bogleheads would say; I sad they would post charts and give reasons why not to do it. I thank all of you for your time and effort, I am going to do it but I'm not as enthusiastic as I was before I asked. :confused :beer
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Re: Larry beats the S&P 500.

Post by 1789 »

J G Bankerton wrote: Wed Jun 17, 2020 10:50 pm
1789 wrote: Wed Jun 17, 2020 10:13 pm Steven Wymer from Fidelity beat them all with the final sprint over the last mile of the race. :P
Closed to new investors, so it looks like TRBCX is the only one open to new investors. Why are FDGRX and VPMCX closed, are they only for investors with $10 million liquid to invest? I have heard about these funds.
Mountain Doc wrote: Wed Jun 17, 2020 10:27 pm OP - Had you been looking at the fund's performance from 1995 to 2008, would you have bought the fund in 2008 before all the outperformance began? No, you would have figured that fund was just another closet index fund.
Larry has improved and he is open to new investors. It's only going to be 13.7% of my stocks.

My son asked what the Bogleheads would say; I sad they would post charts and give reasons why not to do it. I thank all of you for your time and effort, I am going to do it but I'm not as enthusiastic as I was before I asked. :confused :beer
Beer here as well. Dont worry :D

They are closed to new investors because when so smart people tries to join the train, train machinist would have hard time to ride it due to heavy weight. Overcrowded funds are not easy for the managers to invest increasing money supply, so firms close these funds to prevent that and help the manager.
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Re: Larry beats the S&P 500.

Post by inbox788 »

unclescrooge wrote: Wed Jun 17, 2020 8:21 pm
wandering_aimlessly wrote: Wed Jun 17, 2020 8:10 pm Definitely feels like the S&P 500 isn't the best benchmark - but someone more familiar with the risk profile could comment better. It seems like a comparison to a more risk adjusted benchmark looks like the out performance is smaller and concentrated in the last 3-5 years. Out performance for that period is not so unusual - the more valuable question is: could you have looked at this fund around 2010-2012 years and been able to tell it was almost ready to take off? If you can identify who is going to outperform (even over a relatively short period of time) before they outperform - then you have something special (I certainly can't) - and there is no way I can count on strong performance over that short a time period and use that to predict future performance. I'll stick with my boring indexing.
If it's a tech heavy fund shouldn't the benchmark be QQQ?
Now it should. It may not in the past.

It doesn't beat QQQ last 10 years. If you look at VTSMX on morningstar.com and compare TRBCX from 1992-2010 or so it nearly the same. From 2010-present, it's similar to QQQ. Interestingly VTSMX beats VOO/SPY by more than I would have expected, which makes me a little concerned something may not be correct. [I haven't figured out how to share these new interactive charts; Is there another/better quick comparison tool?]

Look at VTSMX comparison until 2010
https://www.portfoliovisualizer.com/bac ... ion3_3=100

Look at QQQ comparision after 2010
https://www.portfoliovisualizer.com/bac ... ion3_3=100
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Re: Larry beats the S&P 500.

Post by annu »

I have it beat with 1 fund,

https://www.portfoliovisualizer.com/bac ... ion2_2=100

:D. Now I just need a time machine
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Re: Larry beats the S&P 500.

Post by UpsetRaptor »

Large cap growth funds have generally beaten the S&P 500 the last several years, due in large part to the outperformance of FAANGM. This is not news. Will that keep up? Maybe, maybe not. Energy had a nice run for several years, now in the dumps. The tech stocks of the 90s had their day.

If large cap growth, particularly FAANGM, ceases to outperform the S&P 500, so will this fund.

Here's the top 10 holdings, comprising roughly half of total assets:
Image
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Re: Larry beats the S&P 500.

Post by alexp »

TRBCX is available in my 401K as well. I use an allocation of 20% for it in order to give a growth tilt to my stock holdings which mainly comprise of S&P 500. As others said, this fund leans towards FAANG/Tech stocks.
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Re: Larry beats the S&P 500.

Post by J G Bankerton »

This chart compares the closest Vanguard fund, VIGAX, available that tracks the same index as TRBCX.
TRBCX is blue, Vanguard is green and the index is orange. I hope Larry stays hot.

https://quotes.morningstar.com/chart/fu ... A%5B%5D%7D
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Re: Larry beats the S&P 500.

Post by Ben Mathew »

J G Bankerton wrote: Wed Jun 17, 2020 9:57 pm
Ben Mathew wrote: Wed Jun 17, 2020 9:22 pm There has to be a part of your decision process that prevents you from buying into bubbles. For me, it's a focus on earnings, not past performance. So it's value over growth for me. Even if recent performance is poor. Especially if recent performance is poor.
Larry's bubble has been around for 23 years
I think you are overstating the size and consistency of his outperformace relative to growth fund benchmarks.
J G Bankerton wrote: Wed Jun 17, 2020 9:57 pm I don't want or need earnings so the low dividends appeal to me.
Would you say this about a business that you own? That you don't want or need profits?
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Re: Larry beats the S&P 500.

Post by J G Bankerton »

Ben Mathew wrote: Wed Jun 17, 2020 11:55 pm
J G Bankerton wrote: Wed Jun 17, 2020 9:57 pm
Ben Mathew wrote: Wed Jun 17, 2020 9:22 pm There has to be a part of your decision process that prevents you from buying into bubbles. For me, it's a focus on earnings, not past performance. So it's value over growth for me. Even if recent performance is poor. Especially if recent performance is poor.
Larry's bubble has been around for 23 years
I think you are overstating the size and consistency of his outperformace relative to growth fund benchmarks.
J G Bankerton wrote: Wed Jun 17, 2020 9:57 pm I don't want or need earnings so the low dividends appeal to me.
Would you say this about a business that you own? That you don't want or need profits?
I don't have to pay tax on growth at the end of the year. I only want earnings on my cash to keep pace with inflation and taxes. With stocks I'm going to go for growth and pay taxes if/or when I sell.
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Re: Larry beats the S&P 500.

Post by J G Bankerton »

Ben Mathew wrote: Wed Jun 17, 2020 11:55 pm
J G Bankerton wrote: Wed Jun 17, 2020 9:57 pm
Ben Mathew wrote: Wed Jun 17, 2020 9:22 pm There has to be a part of your decision process that prevents you from buying into bubbles. For me, it's a focus on earnings, not past performance. So it's value over growth for me. Even if recent performance is poor. Especially if recent performance is poor.
Larry's bubble has been around for 23 years
I think you are overstating the size and consistency of his outperformace relative to growth fund benchmarks.
J G Bankerton wrote: Wed Jun 17, 2020 9:57 pm I don't want or need earnings so the low dividends appeal to me.
Would you say this about a business that you own? That you don't want or need profits?
I don't have to pay tax on growth at the end of the year. I only want earnings on my cash to keep pace with inflation and taxes. With stocks I'm going to go for growth and pay taxes if/or when I sell.
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Re: Larry beats the S&P 500.

Post by Munir »

These performance graphs can be deceptive because they could look very different if you change the initial starting date of the graph. Who decides what the relevant starting date should be? I assume it is whoever wants to claim to be the "winner".
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Re: Larry beats the S&P 500.

Post by mrspock »

Munir wrote: Thu Jun 18, 2020 12:42 am These performance graphs can be deceptive because they could look very different if you change the initial starting date of the graph. Who decides what the relevant starting date should be? I assume it is whoever wants to claim to be the "winner".
To figure this out, you can do rolling comparisons and see who has the most number of runs on top. You can do this by year, month, week etc.

That aside, I think the thing to focus on comparisons here, is just understanding why the outperformance exists (i.e. identify the factor(s)), and if it's something you believe in long term, can you get similar performance for a lower MER. Thus the growth fund comparisons floating around in this thread. I'd be more impressed if the fund had a history of shifting their focus from value, to growth to financials demonstrating an ability to anticipate the ebbs and flows of the strongest areas of the market, in this case it looks like "closet indexing" followed by betting on tech/growth in the 2010s.
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Re: Larry beats the S&P 500.

Post by nisiprius »

J G Bankerton wrote: Wed Jun 17, 2020 11:51 pm...I hope Larry stays hot...
And that, in five words, is the problem.

You are really basing this decision on confidence in Larry Puglia. Exactly what do you know or think about him other than the past performance of his fund?

I never understand how active fund investors deal with this. I don't think I can pick stocks. Why would I think I can pick stockpickers? It's easy to find individual stocks that have beaten the market consistently long periods of time. Buying them isn't the master key to beating the market. Why should it be any different for mutual funds?

Barry Ritholtz wrote an article that has stuck with me (mostly because of how badly it grated on me). As an investor in an active fund, these are the questions you need to answer. How would you answer them? When Should You Fire Your Fund Manager? I hate to try to summarize opinions I don't agree with, but basically he says if you are investing in (active) mutual funds, you need to watch your fund manager. You need to "fire" them:
  • When they suffer from style drift...
  • When they become too big: Some managers find a niche that they can profitably exploit. But beyond a certain size — and that can range from $1 billion to $5 billion dollars — they no longer can create alpha with that strategy.
  • When they fight the dominant market trend: Bill Miller’s streak came to an end amidst a value trap.
  • When they become a closet indexer: When a fund owns 100, 150, 200 names, they effectively become a high cost index...
  • When they seem to lose their edge: Whether its success or money or a loss of interest, managers sometimes lose the fire in the belly. Determining this is admittedly challenging in real time, and we often find out after the fact about some personal issues.
So let's apply this to Larry Puglia and TRBCX.

[ ] Style drift? I don't know and I'm too lazy to research it.

[√] Too big? $78 billion. Well above the "$1 billion to $5 billion" which he seems to be setting as a maximum.

[ ] Fighting the dominant market trend? This is one of those things that baffles me. How the *&%$# does anyone know? Big trends have medium-sized countertrends within them, those have smaller trends within them, and so on and so forth. You tell me, honestly, what is the "dominant" trend of the market as of 5/18/2020?

[ ] Closet indexer? Probably not.

And the last one always has me reeling.

[?] How do you decide if a manager has "lost their edge?" You tell me, does Larry Puglia still have the fire in the belly? I don't mean to suggest he doesn't; I know nothing about his fire or his belly. Even more problematical is Ritholtz's remark that "we often find out after the fact about some personal issues." (How do you use something you find out after the fact to decide what to do now?) What, exactly, do you know about Larry Puglia's personal life?
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Re: Larry beats the S&P 500.

Post by J G Bankerton »

nisiprius wrote: Thu Jun 18, 2020 7:48 am
J G Bankerton wrote: Wed Jun 17, 2020 11:51 pm...I hope Larry stays hot...
And that, in five words, is the problem.
[√] Too big? $78 billion. Well above the "$1 billion to $5 billion" which he seems to be setting as a maximum.
What, exactly, do you know about Larry Puglia's personal life?
I didn't do anything crazy; I sold my foreign holdings, total dog for many years, and took a chance on Larry staying hot. I rolled the dice with 13% of my stock capital.

The two large cap managed funds that beat TRBCX and were suggested in this thread are closed to new investors, they got to big. TRBCX has growen by 1/3 in a year; I can see the fund being closed to new investors so I became a current investor.

This is what I know about Larry; In April, Puglia took on an associate manager, Paul Greene, but says he has no plans to retire. I'll take him at his word.

"Larry Puglia was born in Waynesburg, Pennsylvania in 1960. He attended the Darden Graduate School of Business Administration where he gained an MBA degree. Larry started his career with T Rowe Price in July 1990 and has been managing funds for over 23 years. He uses a fundamental, bottom-up investment process. Larry is a Chartered Financial Analyst and a Certified Public Accountant. Outside of fund management he enjoys golf, running, cycling, skiing and music."

He manages funds for TD, Mass Mutual and J Handcock, all large cap growth funds. He ranks 169 out of 1509 US equity managers. I can't find any arrest records or SEC sanctions.


This is all Vanguard's fault. I held only Vanguard mutual funds when Vanguard strongly suggested I open a brokerage account with Vanguard Marketing. Then they made the ETF class cheaper to own than the mutual fund class. Then they made trading free. It's not my fault; I'm retired and board, this is better than going to Atlantic City where the rake can be 10% :shock:
Munir wrote: Thu Jun 18, 2020 12:42 am These performance graphs can be deceptive because they could look very different if you change the initial starting date of the graph. Who decides what the relevant starting date should be? I assume it is whoever wants to claim to be the "winner".
I use 1993, that's when Larry started TRBCX; he has improved with experience.
mrspock wrote: Thu Jun 18, 2020 1:12 am ... in this case it looks like "closet indexing" followed by betting on tech/growth in the 2010s.
The expense is close to an index fund. That said Larry bets his "large cap" benchmark way more than he bets the S&P 500, the benchmark of all benchmarks.
Last edited by J G Bankerton on Thu Jun 18, 2020 1:10 pm, edited 1 time in total.
02nz
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Re: Larry beats the S&P 500.

Post by 02nz »

J G Bankerton wrote: Thu Jun 18, 2020 11:41 am The expense is close to an index fund.
The expense ratio is 0.69%, not terrible for an active fund, but about 20 times that of an index fund. That's not "close."

By comparison, Vanguard's large-cap active funds are typically around 0.3-0.4%.
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Re: Larry beats the S&P 500.

Post by 02nz »

J G Bankerton wrote: Thu Jun 18, 2020 11:41 am This is all Vanguard's fault. I held only Vanguard mutual funds when Vanguard strongly suggested I open a brokerage account with Vanguard Marketing. Then they made the ETF class cheaper to own than the mutual fund class. Then they made trading free. It's not my fault; I'm retired and board, this is better than going to Atlantic City where the rake can be 10% :shock:
I guess this was supposed to be tongue in cheek, but Vanguard hasn't made it any cheaper or easier to trade mutual funds like this one, so that's on you.
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Re: Larry beats the S&P 500.

Post by UpperNwGuy »

This thread is fascinating to me. When I first started investing, I briefly considered putting 5-10% of my portfolio into an actively managed fund for excitement, and the other 90-95% into a boring three-fund portfolio of Vanguard index funds. The T Rowe Price Blue Chip Growth Fund was the active fund I was planning to use. (The other candidates were Vanguard Wellington and Fidelity Contrafund.) My better inclinations prevailed, however, and I decided not to seek excitement through investing and went all-in on boring. Now, however, I can get my excitement vicariously through J G Bankerton's new position in Blue Chip Growth. I wish him every success and hope that he keeps us updated frequently, but especially when the market gets volatile.
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Re: Larry beats the S&P 500.

Post by J G Bankerton »

02nz wrote: Thu Jun 18, 2020 1:10 pm
J G Bankerton wrote: Thu Jun 18, 2020 11:41 am The expense is close to an index fund.
The expense ratio is 0.69%, not terrible for an active fund, but about 20 times that of an index fund. That's not "close."

By comparison, Vanguard's large-cap active funds are typically around 0.3-0.4%.
TRBCX is "relatively" close to an index fund in fees. Managed hedge funds fees are 2% plus 20% of profits, if any.
02nz wrote: Thu Jun 18, 2020 1:13 pm
J G Bankerton wrote: Thu Jun 18, 2020 11:41 am This is all Vanguard's fault. I held only Vanguard mutual funds when Vanguard strongly suggested I open a brokerage account with Vanguard Marketing. Then they made the ETF class cheaper to own than the mutual fund class. Then they made trading free. It's not my fault; I'm retired and board, this is better than going to Atlantic City where the rake can be 10% :shock:
I guess this was supposed to be tongue in cheek, but Vanguard hasn't made it any cheaper or easier to trade mutual funds like this one, so that's on you.
It is 90% tongue in cheek but not long ago Vanguard was charging $7.95 to buy or sell stocks or non Vanguard funds it made a penny watcher like I think.
Vanguard did strong arm me into a brokerage account, I avoided doing that to keep me out of trouble.

Larry says Google and Facebook are strong contenders going forward. He wrote a scholarly white paper giving his reasons. It explains his investment philosophy and what he does with his day.

"Final Thoughts
There is no magic formula or silver
bullet for finding quality, durable growth
companies. It involves a lot of hard
work, digging, and detailed research
and analysis. And in unprecedented
times like today, it involves continuous
engagement with company
management teams, asking difficult
questions, checking and rechecking
investment theses, and ultimately
deciding if the company’s longer‑term
strategy can still be delivered."

White paper:How the Coronavirus Is Reshaping the Blue Chip Universe
UpperNwGuy wrote: Thu Jun 18, 2020 1:28 pm Now, however, I can get my excitement vicariously through J G Bankerton's new position in Blue Chip Growth. I wish him every success and hope that he keeps us updated frequently, but especially when the market gets volatile.
I didn't post about the 100 shares of VZ I bought for the 4.5% dividend when money markets started paying next to nothing. I'm only down 3.38% in six months. :annoyed
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Re: Larry beats the S&P 500.

Post by 02nz »

J G Bankerton wrote: Thu Jun 18, 2020 1:32 pm Larry says Google and Facebook are strong contenders going forward. He wrote a scholarly white paper giving his reasons. It explains his investment philosophy and what he does with his day.
Do you really need scholarly white papers to tell you that? Those two companies are already the fourth and fifth top holdings in VTSAX. Actually by far the largest holding in Larry Puglia's fund is Amazon at 10%.

Given the very high concentration in top holdings (the top 10 stocks make up almost half of the fund), seems like you could just buy those stocks to replicate much of his strategy, such as it is. 0.00% expense ratio. :wink:
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Re: Larry beats the S&P 500.

Post by inbox788 »

J G Bankerton wrote: Wed Jun 17, 2020 11:51 pm...I hope Larry stays hot...
You might as well say, "I hope Nasdaq keeps beating SP500" or "I hope Tech stays hot".
nisiprius wrote: Thu Jun 18, 2020 7:48 am [ ] Style drift? I don't know and I'm too lazy to research it.
[ ] Closet indexer? Probably not.
Without doing research, but just comparing performance, TRBCX was a closet TSM fund 1993-2010 and a closet QQQ/XLK 2010-present. They made one good or lucky decision to shift gears in 2010. I hope they know when Nasdaq or Tech end the run and what other sector play will take over and shift gears again at just the right time.

https://quotes.morningstar.com/chart/fu ... A%5B%5D%7D [1993-2010 similar performance; threw in Wellington Fund that would have been the biggest winner for the time period]

https://quotes.morningstar.com/chart/fu ... A%5B%5D%7D [2010-present vs. Nasdaq/Tech]

And if they were "really hot" (TM), compare 2010-2020 QQQ vs VITAX. First 5 years QQQ wins and TRBCX followed, but they missed the 2015 change of gears towards VITAX [hindsight 20/20]. Who knew or should have known in 2015 that Visa, Mastercard, Nvidia, Adobe, Paypal, and Salesforce would be the "hot stocks" these last 5 years? And the next 5 years? FWIW, TRBCX got Visa and Mastercard, but missed on the other 4.

https://quotes.morningstar.com/chart/fu ... A%5B%5D%7D

Vanguard Information Technology ETF (VGT) or Vanguard Information Technology Index Fund Admiral Shares (VITAX)
https://investor.vanguard.com/etf/profile/overview/vgt
Last edited by inbox788 on Thu Jun 18, 2020 2:03 pm, edited 1 time in total.
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Re: Larry beats the S&P 500.

Post by J G Bankerton »

02nz wrote: Thu Jun 18, 2020 1:47 pm Given the very high concentration in top holdings (the top 10 stocks make up almost half of the fund), seems like you could just buy those stocks to replicate much of his strategy, such as it is. 0.00% expense ratio. :wink:
I don't have time to meet with top management of those companies. I'm not investing billions in their companies so I doubt they would meet with me anyway.
inbox788 wrote: Thu Jun 18, 2020 1:48 pm
J G Bankerton wrote: Wed Jun 17, 2020 11:51 pm...I hope Larry stays hot...
You might as well say, "I hope Nasdaq keeps beating SP500" or "I hope Tech stays hot
Those are indexes with no manager, Larry is a manager on a hot streak; I'm betting on Larry rolling a 7.
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Re: Larry beats the S&P 500.

Post by 02nz »

J G Bankerton wrote: Thu Jun 18, 2020 2:01 pm
02nz wrote: Thu Jun 18, 2020 1:47 pm Given the very high concentration in top holdings (the top 10 stocks make up almost half of the fund), seems like you could just buy those stocks to replicate much of his strategy, such as it is. 0.00% expense ratio. :wink:
I don't have time to meet with top management of those companies. I'm not investing billions in their companies so I doubt they would meet with me anyway.
Huh? It takes about 2 seconds of googling to find the fund's top 10 holdings (accounting for 49% of the portfolio, a lot higher than most active funds). You don't need to meet with Jeff Bezos to buy Amazon stock. (And I doubt Larry Puglia gets a meeting with Jeff Bezos, either.)

Hey look, it's your money, buy the fund if you want. Just seems like you came here for confirmation and are twisting yourself into all sorts of pretzels (hey the expense ratio is a lot closer to an index fund than to a hedge fund!) to justify what you already decided. Bogleheads was the wrong place for confirmation if you want to buy a active fund.
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Re: Larry beats the S&P 500.

Post by jibantik »

I sure you can find many funds that beat the s&p 500. The difficulty is knowing which funds are going to win going FORWARD.

It absolutely blows my mind that people on this forum, let alone someone with nearly 2k posts, are willing to choose a mutual fund PURELY on past performance. This kind of thing sets a terrible example for people coming to this board looking for advice.

Well, I guess I will paste it again. Here is yet another remind why basing decisions on past performance is a TERRIBLE idea: https://www.bogleheads.org/forum/viewtopic.php?t=156573
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Re: Larry beats the S&P 500.

Post by 02nz »

jibantik wrote: Thu Jun 18, 2020 2:29 pm It absolutely blows my mind that people on this forum, let alone someone with nearly 2k posts, are willing to choose a mutual fund PURELY on past performance.
Or to claim that a 0.69% expense ratio is close to an index fund since hedge funds charge much more! :oops:

Yeah I know, the horse is very dead. :P
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Re: Larry beats the S&P 500.

Post by surfstar »

J G Bankerton wrote: Wed Jun 17, 2020 10:50 pm It's only going to be 13.7% of my stocks.
I predict that you will not realize any meaningful gains if he continues to "beat" the S&P 500. You also will not go broke if his fund goes to $0.
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Re: Larry beats the S&P 500.

Post by nisiprius »

If you want to feel good about the expense ratio, TRBCX with an 0.69% expense ratio, is far cheaper than RYSOX, the Rydex S&P 500 index fund--with a 1.67% expense ratio.
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Re: Larry beats the S&P 500.

Post by PVW »

J G Bankerton wrote: Wed Jun 17, 2020 7:27 pm Opinion: Proof that you can outperform with the right actively managed stock fund

Larry Puglia, the manager of TRBCX, has out performed the S&P 500 for 27 years.
Cumulative. There are a lot of ways to spin the numbers, but looking at cumulative return since inception makes it look like he's killing it right now.

Looking at calendar year returns between 1994 and 2019, TRBCX beat the VFINX in 16 of 26 years. So about 62% of the time.

If he has a bad year and significantly under performs the market are you going to lose faith? Or are you willing to bet that he can outperform in subsequent years to get back to even?
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