Over the past 18 years I’ve been managing a strategy that is focused on and has generated attractive absolute returns (1998-2016). I believe absolute return investing is superior to relative return investing. Relative return investing has never made sense to me. Investors, big and small, think in absolute returns (think pension return assumption of 8% or an individual return goal of “making money”). Nevertheless, the investment management industry has consistently gravitated more and more to the world of relative investing. In relative investing, losing 30% of clients’ capital is an achievement if the market declines 32%!
In the following posts I will attempt to shine light on absolute return investing and why I prefer it to the relative world. Furthermore, I plan to provide current updates on the business environment through the eyes of 300 small cap companies — many of which I’ve followed for 10-20 years. As I recently recommended returning capital to clients (due to the excessive small cap valuations and broadness in overvaluation), I’m using this blog, along with managing my own separate account, as a way to stay engaged until my opportunity set improves and I eventually return to the asset management industry. In effect, I decided to go all-in on patience and move my absolute return portfolio to or near 100% cash (I have owned and continue to consider owning cash hedges such as asset heavy equities).
Podcasts explaining the current environment and my investment process:
Most Popular Posts (as of July 2017):