R.I.P. Dodge & Cox

No, we don't believe that Dodge & Cox (DODFX & DODGX) is going out of business, but we are calling them out along with Bill Miller (LMVTX), Richard Pzena (JCVIX). They are all Heroes of the Revolution.

What is the sin of all of these one time star managers? How about violating the simple rule . . . never double down into a losing position. And oh how they doubled down on financials. They did it over and over again. All of the above were idiots. Their hubris got in the way. It was not hard to see that financials were tanking and going to do so.

So what did these "stars" spend your retirement on? Bear, Lehman, Fannie, Freddie, Wachovia, Citigroup, Indymac.

Ahh yes, they have great long-term track records, which as we had stated made them more likely to underperform, as their flagship funds were the size of aircraft carriers. They had necessarily become index funds.

We particularly found Pzena's behavior appalling. We listened to numerous quarterly conference calls and investor calls on financials. How he made those not buying seem foolish. It was just like 1990. The riches to be made. Shame on him.

It is one thing to be wrong, it is another to stay wrong. All of the above stayed wrong, and continued to be wrong. As one of our most admired investors, Dennis Gartman, has often said, if you buy a stock and it goes down, you are wrong. So why would you buy more of it? Gartman notes that such a tactic often results in ruin.

Unfortunately Miller, Pzena, Dreman, Dodge & Cox could not accept that they were wrong. The tragedy of it is that they did it with the retirement money of many Americans.

Oh and let us not forget another one of our rules. Never try to catch a falling knife.

We will put it in print and stick by it. The most over valued commodity is a bottom-up fundamental analyst concentrating on mid and large caps. Not only US, but International and Emerging markets. They add no value and simply bloat the payroll.

We'll stick with the etfs.