Over the past decade, a number of highly-regarded value investors with attractive long term track records have lagged the major benchmarks, and not just over one or two years, which can reasonably be expected to occur to any investor from time to time, but over stretches as long as 5-10 years.* There have been many reasons for this, including the much-discussed outperformance of 'growth' over 'value'; the rise of index funds; and markets becoming more competitive. In some cases, it has also been due to previously celebrated investors having only assembled their prior robust track records through a combination of luck and concentration, and having been subsequently revealed to have been far less proficient investors than previously believed (e.g. Berkowitz; Tilson; Ackman). However, one important contributor to many quite excellent investors' underperformance has been the simple fact that global indices have risen more than expected (by many) over the past 10 years, and these investors have held high levels of cash throughout this period - often 20% or more.
Sunday 10 November 2019
Friday 8 November 2019
I've been intending to write a post on free speech for quite some time. I've made several attempts, but it never quite crystallised in the manner I had hoped (I find that if I do not write a post start to finish in a single sitting, it never quite seems to get completed; my curiosity moves on to other matters, my thinking evolves, and when I return to the issue my preferred means of expression changes and necessitates a re-write). There was so much I wanted to say, but I struggled to find a way to present all of my arguments in well-structured manner that was not overly contorted or lengthy.
Thursday 7 November 2019
It is widely acknowledged in the investment world that one need think and act in a contrarian manner in order to achieve outsized returns and differentiated results. However, despite many claims to contrarianism and 'going against the crowd', its actual practice is vanishingly rare, and the core ingredients that drive effective contrarianism are also often misunderstood. It is not simply a matter of having a disagreeable personality, and disagreeing for the sake of it, or buying a stock simply because it has gone down. Much of what passes for contrarianism these days is actually what I describe as 'faux contrarianism' - buying expensive stocks that have recently become slightly less expensive, but where the fundamental view on the company remains very much in accordance with recent mainstream opinion (and often fails to comprehend new, emergent negative developments which have driven the recent share price decline, but are not yet apparent to all).