All-Star Managers Fail to Make This Year's Cut

J.P. Morgan Sr. was once asked for a stock market prediction. "Prices," the great banker replied gravely, "will fluctuate."

Even in an uncertain world, you can count on some things. Welcome to TheStreet.com's newest column. I'll be writing here about mutual funds, exchange-traded funds and other investment products -- and about the highly paid people and companies who manage them.

While the column has just been launched, I can already predict many of the stories I will be writing in the months and years ahead. Otherwise intelligent and professional people doing really stupid things with your money? That's a given. Along with "experts" getting caught out by events -- again.

Professional investment managers will get caught with their hands in the cookie jar. Americans will also lose billions of dollars on high fees and mediocre performance -- as usual. This costs us all far more than the occasional scandal. But it doesn't make for exciting headlines, so hardly anyone talks about it. I will.

But no matter what happens, I am happy to report that it will always be "a great time" to invest. If you don't believe me, just ask the fund managers. I have never heard them say anything else. After all, on Wall Street, share prices never "fall." They have a "pullback." Or maybe "enter a consolidation phase." And it's always a "healthy" one, too!

On to today's column.

Something seriously weird is going on in the mutual fund world this Christmas. Imagine tuning into the third day of the Masters to find that none of the big names had made the cut. Tiger Woods, Phil Mickelson, Vijay Singh, Jim Furyk, Ernie Els -- they're all sitting in the ESPN booth wearing a mike. Or they've gone home. That's Wall Street right now.

It's been widely noted that fund manager Bill Miller -- who may be the Tiger Woods of the industry -- is trailing the market average for the first time in 16 years. Miller, the manager of (LMVTX)Legg Mason Value Trust, has beaten the Standard & Poor's 500 Index for 15 years in a row. But he has just three weeks left to keep his record streak alive, and it's not looking good. He's 10 percentage points behind.

And that's not the half of it. Bob Rodriguez at (FPPTX)FPA Capital. Ron Muhlenkamp at the fund that bears his name. Manu Daftary at (QUAGX)Quaker Strategic Growth. Richie Freeman at (SHRAX)Legg Mason Partners Aggressive Growth. These are all-star players. But none of these funds are going to catch the market average this time.

Meanwhile, it's touch and go for Will Danoff at (FCNTX)Fidelity Contrafund, Bill Nygren at (OAKLX)Oakmark Select and Marty Whitman at (TAVFX)Third Avenue Value. They'll each need a birdie, or better, on the final hole to make the cut this time.

(Full disclosure: I am an investor in Legg Mason Value, Quaker Strategic Growth, (MUHLX)Muhlenkamp and Oakmark Select.)

I'm being a little unfair. Some of these managers have other funds -- such as Nygren's (OAKMX)Oakmark Fund -- which have done better and which seem likely to edge the market. But overall the picture is surprisingly gloomy.