Mutual Fund ManagerTypical Day

The focus here is on a mutual fund manager. That is, the elf who makes the toys Santa will sell through major chain department stores and Amazon after every Thanksgiving. The fund manager is the one in charge of managing the investments, not the investors. Her boss is, in a way, the stock and bond market. And it’s her enemy too – whether or not she is a good mutual fund manager or a bad one is based on how well she does relative to the market. 

If she manages a portfolio that is marketed to investors such that it “competes” with just the S&P 500, then if the S&P is up 15% in a given year, and she is up only 12%, she sucked. Does she get fired for underperforming by 3%? Probably not. But there’s no fat bonus either. 

That same gal the next year might be down 5%. And be given a huge bonus and be perceived as awesome. Why? Because the S&P 500 was down 18%. She crushed the market by 13%. She’s a “bear market investor,” one who does great in down markets and just barely keeps up in big bull markets. And that’s just totally fine in MutualFundLand. This kind of investor is loved and has a nice long career ahead of her in the biz.

Today is a bad day, as Minnie Mufund strolls into the office at 6 am. She works for a California based mutual fund, so she lives Wall Street hours, which play havoc with her social life at night (she turns into a pumpkin at 9 pm) but gives her afternoons off since the market closes at 1 pm California time.