If you haven’t seen Jerry Maguire, you should, but if you haven’t, there’s one exchange you’ve probably at least heard colloquially referenced at some point- a rather famous scene where agent Jerry Maguire is being goaded by client Tidwell into yelling, “Show me the money!”
Tidwell wants to see the dollar signs, and we don’t blame him- or the would-be managed futures investor who demands the same. In fact, those investors may be smarter than they realize. You see, we get so caught up in analyzing the compound ROR, max Drawdown, Sharpe ratios and the rest of it… we sometimes forget to keep our eye on the ball and ask one very simple question – how much actual money has this manager made for investors?
It is so ingrained in the investor psyche to look at percentage returns (YTD, compound ROR, past 3yrs, etc), that many of us forget to think that these investments are hoping to actually make real money for investors, not just post percentage numbers on a score board. But that shouldn’t matter… should it? The data tells us otherwise.