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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Mattyice who wrote (46704)	2/22/2012 10:47:34 AM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78673

OT? I think you're conflating at least three different issues. :) Let's try to disentangle them. :) - Investor should be judged just by their performance. You can add things to it like "long term performance" or "risk adjusted performance", though I think that "risk adjusted" is a misnomer for hand waving and saying "I love this guy"/"I hate that guy". ;) Obviously value investors may be early or very early and may underperform during bubbles like 2000-Internet mania, but that's why we talk about long term performance. :) And last decade was not really a difficult time to outperform with market pretty flat over 10 years. ;) - Talking heads (sorry Meredith ;)) could be judged by the correctness and timing of their predictions. In general though they aren't. They are judged by whether their spiel corresponds to listener's mental model and whether they look nice (sorry Meredith :P). Overall, there's not much point arguing that Jane was better talking head than Joe since no one is keeping a tally and people have very selective memories. :))) There are extreme cases where someone can be proven to be a loony, but overall it's just a matter of taste. ;) - Fund managers do have a handicap of attracting and keeping funds. They might be measured by their capability of attract/maintain capital rather than their returns. Mike Burry was very successful with this at first, which helped him to start his career, but then he had trouble with it during/after his big bet ;). I think this is somewhat orthogonal to manager's performance. Crappy managers are sometimes very savvy in maintaining capital and vice versa. Buffett was savvy in both, which is part of his success. ;) So with this all written out, let's return to what you said: "You see something different than everyone else is seeing and it does not make sense to you. Under this scenario I think its difficult to stay in the rat race and play the same game as everyone else" If you're an investor, you do what you think suits your investing style and will still lead to good long term results. If you're a talking head, you get those shmucks in studios to invite you to tell your story If you're a fund manager, you still do what suits your investing style while maintaining a front to the investors so they don't pull money. :) "If a manager has draw downs or performs subpar for several years and then has huge asymmetrical payoffs, not sure how that makes him a failure." If the long term performance is bad after the several years and asymmetric payoffs, then he is a failure. :) If someone did not outperform market over the last 10 years, well, that's not so hot. :) I have no clue what Hendry's performance was. "I think constantly outperforming the market is difficult... that's all." Constantly outperforming market is impossible except for Madoff. :) Even Buffett and Dale Baker :P had below-market years. ;) Long-term performance matters though. You can explain away a year, two, maybe three, but by the time you're explaining away 5-10 years, it's self delusion that you're good at investing. :)