Alto Ingredients Inc (ALTO)

[Harry Winston]

Any institution that buys or sells their their portfolio all at once has to be constantly watching their hand-picked news reports or financial metrics. When these turn (overnight) from bullish to bearish, they pull the trigger and sell their entire portfolio.

When those same signs or metrics turn (overnight) from bearish to bullish, they pull the trigger again and repurchase that same portfolio, possibly with minor changes.

It makes me wonder why these institutional investors don't just buy an index fund and leave it alone. Can they possibly get a bigger return after their frequent (and large) trading costs are factored in? These frequent traders will also be a bookkeeping nightmare, which they will be handing off to an overworked accounting firm. These institutional investors have to be paying a high premium for those services, too.

An S&P index fund, one with low turnover and a small load, has to have a competitive offer for these institutions. The biggest objection to an index fund for these frequent traders, IMHO, is their pride. An actively-managed fund is an opportunity to brag about the numbers, but if your bottom line doesn't beat the indexes, other numbers are mostly trivia.