Do you perhaps mean “strong sustainable ‘dividend’ yields in equities”?

David,

In my opinion, you are headed down a dead-end road trying to get AUM (institutional and pension) controlled by manager consultants as gatekeepers. I’m not telling you anything you probably don’t already know, but in that world you have to “play it safe” where that means being down 38% with a S&P 500 down 38% is OK. It is all about “benchmark risk” and “career risk”. Career risk is 100x more important then actual capital at risk, and it is much, much better to FAIL conventionally then succeed unconventionally and the take the risk of failing unconventionally and looking stupid compared to your peers.

If I were you, and I was dead serious about getting serious AUM to manage, and had at least some financial backing to start, and was 99% confident I could put up the long-term numbers, here is what I would do. This is high risk-high reward.

Start a mutual fund with your unconventional style. It will be expensive and a money-loser for awhile. Once you build a 2-3 year track record, go after high-end upscale independent RIAs that primarily serve individuals. They don’t care about benchmark risk, and tracking the S&P and other assorted nonsense. They care about delivering absolute returns to clients with the least risk taken.

I’ll use myself as an example. I’m an RIA and I use a mix of mutual funds and stocks in managing client portfolios. Can you guess my 2 largest equity funds (and actually 2 of my largest positions overall)?

Fairholme Fund managed by Bruce Berkowitz and Hussman Strategic Growth by Hussman. Arguably, those are two of the most unconventional equity funds you’ll find in the entire equity fund universe, yet they’ve had no problem attracting massive AUM and going from 0 to billions in under 10 years. I think FAIRX started in 1998 and Hussman in 2000. Now I’d bet my last dollar that the overwhelming majority of money in those funds is not institutional or Joe Retail but high-end RIAs serving individual investors.

Why are they successful IMO? Firstly, they deliver the numbers and serve a function in an overall portfolio (defense). They’ve both beaten the S&P 500 by wide margins cumulatively. Secondly, they clearly articulate their philosophies and strategies. Thirdly, they communicate often and effectively with fund shareholders.

You’ve got this blog. That is a vehicle for both explaining and advertising. At a previous employer, I started to do some DD on starting a fund. It was way too expensive for the size of the firm. I’ve been reading your blog for a long time, and it is in my top 5, no doubt. If I had a more detailed insight into the specifics of your stock selection and portfolio management along with numbers, I would seriously consider investing in a fund you managed.

Just wanted to say thank for everything you. I like your calm way of writing things. I end up learning a lot from you.

Did you see the Shanghai market. Here is a good chart. http://i30.tinypic.com/51zx48.png

Also, I disagree with you on the Dollar. I belong to deflationary spiral followed by Inflation category. So expect to see market cracking as the Dollar keeps getting stronger.

Finally, I have a terrible time believing this thing will end well, without US citizens demanding some major changes to Fed.

Best to you and your family.

There is another factor – sellside analysts make recommendations effecting the markets they operate within. If Goldman recommends a stock, the stock may go up only because of the recommendation. I don’t know how you would control for that, but it may be a significant implicit bias.

Just a thought. I don’t know how big your data pool is.