Q& A With FPA Crescent Fund Manager: Keep Emotions in Check

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By Trevor Delaney
Associated Press
Sunday, May 24, 2009

Mutual fund managers are human, too. Their nerves can be frayed by a volatile market just like the rest of us.

"There's a difference between feeling emotional and acting emotionally," said Steve Romick, manager of FPA Crescent Fund, "so my investment actions are clinical."

It's a calm reserve that you would expect to hear from the manager of a billion-dollar fund. Romick's Crescent Fund is hard to categorize because he's allowed to buy stocks, bonds and convertibles.

Managing the fund since its inception in 1993, Romick has posted a return of more than 9 percent through May 20, and a 5-year annualized return of 4.84 percent.

Romick was recently interviewed. Here are excerpts:

QLooking at all that's going on in Washington, D.C., and the recent rise in the market, where's your head in terms of how you're processing this information?

AThere's a lot to process because there are cross-currents. The government is making rules that they are changing and applying inconsistently, and it's scary. I feel like I'm at the blackjack table and cards have been played and I've made my bets. And the dealer hasn't finished playing his cards yet, and he looks at me and says, "Hey, the game is now 23."

Tell me more about what you mean when you say the rules are being applied "inconsistently."

I mean, Bear Stearns is saved, Lehman isn't. Rules are changing regarding student loans, there's health reform coming, there's a lot of different pieces to this puzzle. Some are rules that are changing, some rules are inconsistently applied, it's both. And then you've got the idea that the sanctity of contract law was subverted for the benefit of Chrysler unions. It makes me cautious at best.

Expand on that idea of being cautious. We've been seeing more about people slowly increasing their willingness to get back in the market. Are you feeling any more comfortable as of late?


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