* don’t get so big and unwieldy you lose your flexibility*don’t ignore risk control because you have to stay fully invested*don’t chase fads because your peers are doing so*don’t choose to “fail conventionally” rather than succeed unconventionally*don’t fear periods of underperformance in pursuit of long-term outperformance*don’t diversify your portfolio into irrelevance*don’t be afraid to really be aggressive with your best ideas*don’t hug your benchmark for dear life*don’t drink the kool-aid and carbon copy your b-school buddies*don’t shackle yourself to the worst instincts of clients*don’t fall prey to Byron Biggs’ “secular violence of market cycles”
In addition:
Here is a simple homework assignment for anyone with an open mind:Good Stuff.
Accumulate the track records of a handful of managers who have been beaten the market soundly (by a meaningful margin) for 20+ years. (Yes, they exist.)Try to get some diversity: Value guys, macro guys, CTA trend followers, short-term traders, etc.Without passing judgment on good luck or bad, generalize across the data set in pursuit of answering the following question: What do these guys do differently?To provide a cheat sheet of sorts, you will find that they do things like:*Completely ignore standard benchmarks (or at least feel no constraint from them)*Stick to their guns even when — or especially when — popular conviction runs against them*Size their funds appropriately to market opportunities at hand, rather than getting too large*Take aggressive sized, possibly even huge sized, positions when conviction is greatest*Resist temptation to act in size, or act at all, when true opportunities are non-present*Have a very distinct style and methodology, with intimate knowledge of how and why it works*Tend not to march to the b-school, identikit, flying-on-autopilot-to-the-land-of-groupthink drum
No comments:
Post a Comment