We recently published a post discussing the propensity of investors in the aggregate to make wild swings in and out of markets, and the damage that this type of behavior tends to cause to their investment performance.
We have always believed that following a consistent investment discipline provides much better results over time. This does not mean that we advocate a "buy-and-hold" approach: we believe in the importance of diligently seeking out businesses which are well-positioned for exceptional performance, and closely monitoring those businesses once we commit capital to them, replacing them when necessary.
Here is a link to a recent article entitled "Investors sour on pro stock pickers," discussing large flows of investment dollars away from "active managers" and towards ETFs, based on dissatisfaction with the performance of active managers and the general belief that ETFs offer a better deal. While we do believe that there can be problems with the way some "active" funds are managed, we have also written about the concerns we have over the ETF model.
We would also point out that these kinds of major swings from one management model to another are very similar to the swings from stocks to bonds and back to stocks that we discussed in the previous post. It is certainly important to make changes when warranted, but it is also clear from history that going along with the endless stampeding of the "herd of money" from one extreme to the other can be very harmful.
We believe that a consistent process based on time-tested convictions about businesses is a better way. Above we post our performance history through the most-recent quarter to back up those convictions and the principles that we advocate here on the blog.
For GIPS disclosures and other information, see here.
For GIPS disclosures and other information, see here.