ATTACK OF THE 13F ZOMBIES
Every quarter of every year...about 45 days into the quarter, they appear. Mindless creatures that roam Wall Street looking for portfolios to emulate and fund managers to idolize. They latch onto the SEC Form 13F as if it was a document discovered right beside the Shroud of Turin, with the title "My Stock Picks For Years Zero and Beyond".
Release of the SEC Form 13F (the quarterly filing by fund managers outlining their holdings) has become an event for traders. There are sites dedicated to tracking its contents, traders who have derived methods based around the document and news reports outlining what so and so or such and such have done in the recent quarter.
When it comes down to it, having an investment strategy based upon 13F is idiocy in its finest form. It's another example of how the dislike of homework never leaves us, regardless of our age. It shows that the security of holding onto the hand of a figure you view as being profoundly wiser and infinitely more powerful than yourself is something that lingers within us for life.
Here are the 3 most important reasons 13F investing sucks:
1. Hedging - there are a million ways in today's market of having a long position on your books, when you are in fact neutral or short. Whether you decide to short stock, short options etc.
2. Manipulation - the fund managers have caught on. They don't like being emulated....it distorts price action, makes things sloppy, causes erratic pot-heads to become your fellow shareholder. There are fund managers that will make a position look one way, when it is in fact, quite the opposite.
3. You - just because one guy trades a certain method and makes money, doesn't mean that it will work for you. If you haven't done your research and know little to nothing about the investment, as most who subscribe to this method will, then you are susceptible to being shaken out at the first sign of trouble. And then there is the issue of holding on too long, while your favorite fund manager is either selling or shorting the very same stock. These filings are delayed!
Be original. Do your homework. Investing or trading the markets is like any other professional endeavor - those who work the hardest win. Those who attempt to take shortcuts or play a lazy game, end up on the sidelines wondering what went wrong. Don't be a 13F zombie.
