X-Message-Number: 1137
Subject: Please post appropriately
Date: Thu, 13 Aug 92 00:47:51 PDT

From: Carlos Mondragon
Re: Reply to Perry Metzger re. Alcor Investments & Eric Klein's Postings

>In Re: Eric Klein's message about Alcor procrastinating on the
>investment recommendations being made;

>The situation (as Eric has described it; I pass no judgment yet on the
>accuracy of his report) sounds horrible. I can understand Alcor
>wanting to study the committee's recommendations, but waiting even
>more than a few days to make a decision on any of them is madness. In
>investments, timing is everything. Procrastinating a month on a
>purchase or sale makes the committee useless. If Alcor feels it does
>not have the expertise to study the recommendations in a timely way it
>should get out of the business of managing its own funds and hire a
>money manager; if it wants to manage the money itself it MUST deal
>with recommendations as fast as possible; within a day or two at most.
>If it isn't capable of doing that, it isn't capable of reacting fast
>enough to manage its own funds.

If it were Alcor's intent to maximize return by making short term 
investments, then timing would of course be critical.  But that is not the 
case.  Patient Trust money must be invested for the long term, and our 
advisory committee has chosen good long term investments.  Finding good 
investments takes time and is much better done by people who already have 
expertise and are themselves active investors.  That's why the board 
established the advisory committee.  But the fiduciary responsibility will 
always rest with the board of directors.  Given the fact that suspension 
patients are in no condition to go out and earn more money, we will always 
proceed with a caution somewhat greater than ordinarily mandated by the 
"prudent man rule".  I trust we will never see the day when Alcor's board 
puts unilateral control of the Patient Care Trust Fund into the hands of a 

>Haste is never a good thing, but we aren't talking about conducting
>massive fishing expeditions on companies prior to investing in private
>equity placements; we are talking about open market equities
>transactions where you can learn everything obvious there is to know
>about a company in six hours given the last few annuals and 10Ks;
>allowing a couple of days of time is very generous given that the
>committee has prescreened all the recommendations. Could someone from
>Alcor comment on why most of the proposals are being ignored?

I agree with everything here but the last sentence.  We didn't ignore the 
recommendations presented at the July meeting, we just declined to 
implement them instantly (by the way, at the time the committee didn't 
present the board with any material concerning its recommendations, so I 
got it myself and forwarded it to the rest of the board).  At the last 
board meeting, we explained to the committee that if they would just get 
their recommendations to us 10 days before the meeting (rather than at the 
meeting), and provide materials on their suggestions, we could then be 
prepared to act when we meet.  Neither Eric or any of the other 26 people 
at Sunday's meeting objected, so I suppose he had another agenda for 
posting his memo after the meeting.  (Eric is one of the people who is 
greatly unhappy with my continued tenure at Alcor.  Most of his investment 
ideas are good, but there is a palpable slant to his presentation.)

>(I don't want this to sound hostile; I understand how thus far this
>might not have hit home. I'm just pointing out that managing a few
>hundred k of the most important money you can imagine, the one and
>only lifeline for dozens of completely disabled patients, is not a
>joke, not a matter for amateurs, and certainly not a matter for
>procrastination. I understand that given the pressures that all the
>recent suspensions have created this issue may have fallen by the
>wayside, but it can't be allowed to fall by the wayside in the future.
>Either someone has to be given a mandate to treat this as a high
>priority, or a fiduciary has to be appointed.)

Actually, the recent suspensions might have slowed my response somewhat, 
but not much.  I would point out again that we don't intend to "play the 
market" with these funds, so that any delays should necessarily be 
inconsequential.  It should also be pointed out that the figures in Eric's 
memo where he describes "loss of potential earnings" were based largely on 
increases in the prices of the equities which the committee recommended 
during the month of July.  According to Eric those price increases ranged 
from 0.532% to 3.59%.  He then annualized these gains in order to come up 
with a huge dollar amount of "lost potential".  If we took that seriously, 
then it would mean that either: a) Eric is expecting us to make quick 
gains by jumping in and out of equities, or b) Eric thinks that it is 
possible that a blue chip utility stock is going to appreciate in price by 
43.09% over the next 12 months.

Not bloody likely in either case.

You'll be interested to know that most of the committee's July 
recommendations were adopted at the August meeting when the board voted to 
implement them with a few modifications suggested by me.  Please call me 
if you want to discuss the details.

Carlos Mondragon

Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=1137