FYI: (In case you missed it, read John Waggoner's "Active Fund Managers Underperform Once Again: S&P" linked below.)
You need to judge us over a full cycle.”
It’s a reasonable argument made by both great active managers and mediocre ones. The subtext is that “any idiot can ride a bull market up, fully invested, and generate performance” but that it takes a skilled manager to know when to move toward less risky allocations or husband cash or take profits or rotate into defensive / high quality, etc. I am sympathetic to the argument and agree with it in theory.
Actually, when you examine every great value manager’s track record, they all broke away from their benchmark and began to outperform at the same moment – when they avoided the Nasdaq bubble and burst at the turn of the century. I could show you a hundred charts of this. In theory, they should be able to do this regularly and continue to outperform.
Regards,
Ted
http://thereformedbroker.com/2017/04/13/you-need-to-judge-us-over-a-full-cycle/
Comments
Josh's commentaries are always insightful and pretty much spot-on.