Benchmarks

“Selling is difficult, and my track record suggests it’s usually a mistake”

“It may be that professionally managed funds are too large a part of the total picture to be able to outperform the market as a whole; it may also be true, as I suspect, that certain weaknesses in their basic principles of stock selection tend to offset the superior training, intelligence, and effort that they bring to this task.”

“Systematic outperformance requires variant perception: one must believe something different from what the market believes, and one must be right.”

“Managers should start out with the belief that if they are trying to actively manage money and outperform the market, the odds are against them.”

“Contrary to their oft-articulated goal of outperforming the market averages, investment managers are not beating the market: The market is beating them.”

“Money managers are not stupid. They realize that sticking one’s neck out and producing short-term under performance that differs from an index that is used as the benchmark is risky.”

“In order to outperform, by definition, you have to depart from the crowd. You have to hold a different position.”

“The market doesn’t know everything, but it doesn’t know nothing, and knowledge is cumulative. The market knows stuff now that it didn’t know forty years ago, so it’s harder to outperform.”

“Story stocks outperform facts — until they don’t.”

“The ability to outperform in the financial market requires creativity, vision, and the ability to see things that others cannot see.”

“Few holdings, well understood, outperform many held lightly.”

“Performance measurers seek benchmarks the way bees seek honey.”

“The long run is a benchmark that helps us to understand the short run, where nothing ever stands still.”

“I always look for red flags. My major red flag all the time is when long governments yield 600 basis points over the yield on the S&P 500. At that point, stocks have always been overpriced.”

“All you have to do, really, is find the best hundred stocks in the S&P 500 and find another few hundred outside the S&P 500, to beat the market.”

“My stocks sometimes get overpriced, but in the long run this kind of company, if you can find it, will outperform the market and the economy. The worst thing you can do is try to catch the swings, sell out too soon and be afraid to buy back in.”

“I am very focused on understanding the downside. And I have a pretty good track record, but it’s not perfect. You can’t play at this level without some pretty big highs and lows.”

“If the stock market has a period of outperformance of its long-term return, it is inevitably followed by some period of underperformance. But people being optimistic and greedy by nature take the recent short-term outperformance of stocks as a sign of good things to come, rather than a warning of bad things to come.”