Consider, more recently, Stephen Feinberg, co-founder of Cerberus Capital Management. Cerberus bought 51% of GMAC in 2006 for $14 billion, and 80% of Chrysler for $7.4 billion.
You can also think of Leon Black, the CEO of Apollo Management. Black's private-equity firm bought Linens 'n Things in 2006 for $1.3 billion with a plan to revive the ailing retailer and sell it for a profit. Instead, the company declared bankruptcy. In 2007, Apollo paid $6.6 billion for Realogy-the parent of Coldwell Banker and Century 21 real estate brokerages-just as the housing boom was inverting.
Finally, remember that in predicting the future the key is not simply getting a single prediction correct; it's getting all of the interacting consequences correct. Ask yourself, just two years ago, would you have confidently predicted that we would elect our first African-American president in 2008? Would you have imagined that Citigroup would trade for a time under $1 or that General Electric would trade for a time under $6 or that Bear Stearns and Lehman Brothers would virtually vanish? That Chrysler and GM would file bankruptcy or that a graduating class of law students would be unable to get jobs? Or that high-end MBAs would be unemployable?
And would you have guessed that we would have a fall of more than 50% in the broad stock indexes or that it would subsequently be up almost 30% in less than one month? Or that oil would triple in price and then fall by more than $100 a barrel? Some gurus might have seen parts of this pattern, but all of it? Again, life is far too complex to be predicted with any consistency.
Are you sure you'll be more successful than other gurus?
Before you decide to kill off MPT, consider that the real problem may well be that you are confusing the concept with the implementation, and beware of selecting alternative strategies that may be harmful to your clients' financial lives.