They should be served as our reminders that we cannot outperform the market every year.
On this blog post, three things should be discussed in the quest of an investor's achievement. I personally think these are something we should ponder about.
1) Warren Buffett's comment in the shareholder meeting 2016
2) Nate Tobik's blog article
3) Jeremy C. Miller's book, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor
Warren Buffett's Comment in the Shareholder Meeting 2016
Before the lunch break, Warren Buffett showed us the presentation slide as per below picture:
I have no doubt that after hefty fees, most hedge funds generally underperform.
There is not much excuses for that unless there is better way to isolate factors in order to show proper performance comparison.
Clearly, the bottom line is that investors examine the investment process in order to achieve extraordinary performance rather than average performance. As smart investors, computer machines, and investors with automated quantitative models participate in the stock market, the abnormal returns as a result of mispriced stocks may eventually disappear very fast in very short time.
Nate Tobik's Blog Article
Nate correctly concludes that the best gurus adapt. That is why I always warn that good strategy like general value investing tend to underperform at certain times. It is not like value investing becoming outdated and stale. Rather, such investing styles need certain conditions to be present in certain time. We should recognise the limitation of investing styles early enough so that we can take a break until obvious investment opportunities appears again.
Jeremy C. Miller's book, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor
I may have read a lot of books related Warren Buffett. I always know that people have different answers after reading first hand sources like partnership letters. That is why I am very keen to see what people's interpretation of the same materials (as what I have read before) is like.
It is excellent book. I would recommend to anyone who have never read Warren Buffett's partnership letters before. Seasonal investors may not see much value add in this book.
This book clearly shows how Buffett has changed his investment style in his investing career.
Chapter 4 has a good discussion about the measurement of active investment performance. I have no doubt that it is far better to see how well you have fared for many years. Consistent performance based on average result of many years should carefully looked at. Sometimes, setting the 'beat the market' target may impair your investment process. If your investment process is good enough, the result will tell itself without the need to set that target. It is far better to examine the failures of your and other investors rather than setting difficult target - invert, always invert.
Chapter 9 is excellent write-up. We all know what mistakes Warren Buffett has made when he is CEO of Berkshire Hathaway. But I am quite sure that we don't know what mistakes he made during the period he ran his investment partnership. Currently, I am much more interested in what kind of mistakes Buffett made during his partnership days. In this chapter, the author recognised nearly-mistake event, which I didn't realise. He had the fortune to find turnaround specialist recommended by Charlie Munger.
Chapter 13 should be important material for people who are making such consideration whether to invest in Fund A or Fund B. The author made a good point which shows that it is important to have fund manager whose interest is aligned to investors' interests. The first thing for these people to examine is incentive structure rather than performance results.
1) Warren Buffett's comment in the shareholder meeting 2016
2) Nate Tobik's blog article
3) Jeremy C. Miller's book, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor
Warren Buffett's Comment in the Shareholder Meeting 2016
Before the lunch break, Warren Buffett showed us the presentation slide as per below picture:
There is not much excuses for that unless there is better way to isolate factors in order to show proper performance comparison.
Clearly, the bottom line is that investors examine the investment process in order to achieve extraordinary performance rather than average performance. As smart investors, computer machines, and investors with automated quantitative models participate in the stock market, the abnormal returns as a result of mispriced stocks may eventually disappear very fast in very short time.
Nate Tobik's Blog Article
Nate correctly concludes that the best gurus adapt. That is why I always warn that good strategy like general value investing tend to underperform at certain times. It is not like value investing becoming outdated and stale. Rather, such investing styles need certain conditions to be present in certain time. We should recognise the limitation of investing styles early enough so that we can take a break until obvious investment opportunities appears again.
Jeremy C. Miller's book, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor
I may have read a lot of books related Warren Buffett. I always know that people have different answers after reading first hand sources like partnership letters. That is why I am very keen to see what people's interpretation of the same materials (as what I have read before) is like.
It is excellent book. I would recommend to anyone who have never read Warren Buffett's partnership letters before. Seasonal investors may not see much value add in this book.
This book clearly shows how Buffett has changed his investment style in his investing career.
Chapter 4 has a good discussion about the measurement of active investment performance. I have no doubt that it is far better to see how well you have fared for many years. Consistent performance based on average result of many years should carefully looked at. Sometimes, setting the 'beat the market' target may impair your investment process. If your investment process is good enough, the result will tell itself without the need to set that target. It is far better to examine the failures of your and other investors rather than setting difficult target - invert, always invert.
Chapter 9 is excellent write-up. We all know what mistakes Warren Buffett has made when he is CEO of Berkshire Hathaway. But I am quite sure that we don't know what mistakes he made during the period he ran his investment partnership. Currently, I am much more interested in what kind of mistakes Buffett made during his partnership days. In this chapter, the author recognised nearly-mistake event, which I didn't realise. He had the fortune to find turnaround specialist recommended by Charlie Munger.
Chapter 13 should be important material for people who are making such consideration whether to invest in Fund A or Fund B. The author made a good point which shows that it is important to have fund manager whose interest is aligned to investors' interests. The first thing for these people to examine is incentive structure rather than performance results.
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