ABSOLUTE RETURN

“An absolute-performance orientation is consistent with loss avoidance, a relative performance orientation is not.” Seth Klarman

“Relative returns are important, but absolute returns are ultimately what can be spent.” Larry Pitkowsky

"Our primary focus is on absolute value versus relative value. Because we are focussed on absolute returns, we will hold cash in the absence of values and an appropriate margin of safety." Arnold Van Den Berg

"Most of the professional investor army goose-step to the relative-return cadence and we, though not out of unthinking conformity, to the absolute-return one." Frank Martin

"I am relatively insensitive to market benchmarks, and I opt toward moderate, safe, absolute returns." Michael Steinhardt

“Real people live in the absolute world. We spend absolute dollars. If I sent my clients a relative performance orientated letter, ‘Dear Client, we are pleased to report that we beat the market this year by 300 basis points; the market declined 43% for the year but we only lost 40% of your net worth,’ I don’t think any of them would be thrilled.” Seth Klarman

“Our job is to pile up yearly advantages over the performance of the Dow without worrying too much whether the absolute results in a given year are a plus or minus. I would consider a year in which we were down 15% and the Dow declined 25% to be much superior to a year when both the partnership and the Dow advanced 20%.” Warren Buffett, Partnership letter

“We don’t want only to beat the indices, we also want to have absolute positive returns.” Mohnish Pabrai

"We consider ourselves to be ‘absolute-return’ investors and do not compare our results to long-only indices. That means our goal is to try to achieve positive results over time regardless of the environment…. In assessing an investment opportunity, a relative return investor asks ‘Will this investment outperform my benchmark?’ In contrast, an absolute return investor asks, ‘Does the reward of this investment outweigh the risk?’ This leads to a completely different analytical framework. As a result both investors might look at the same situation and come to opposite conclusions.” David Einhorn

“Because ensuring the ability to survive under adverse circumstances is incompatible with maximising returns in the good times, investors must choose between the two.” Howard Marks

“We always say we’re absolute return investors.” Chris Davis

"We have said before and will repeat here that you do not really need Baupost to invest your money in bull markets. An index fund could likely perform better. The true investment challenge is to perform well in difficult times. It is unfortunately not possible to reliably predict when those times might be. The cost of performing well in bad times can be relative underperformance in good times. We have always judged that a worthwhile price to pay’.” Seth Klarman

"One thing that brings my blood to a boiling point is when an absolute return guy starts talking about his return relative to anything. My response was, ‘You are not relative to anything, my friend. You can’t be in the relative game just when it suits you and in the absolute game just when it suits you. You are in the absolute return game, and the fact that you use the word relative means that I don’t want you anymore’.” Michael Platt

“If more institutional investors strove to achieve good absolute rather than relative returns, the stock market would be less prone to overvaluation and market fads would less likely be carried to excess.” Seth Klarman

"Because the conventional money management is really more of a merchandising situation than a money management situation-- I mean, those people, you know, really looking to beat the S&P by 1 percent. We're out for absolute returns, and so I wanted to manage the money, and I didn't care about being a merchandiser of the service." Julian Robertson

“We don’t try to be anyone’s best performing manager in a given year because such an attempt would almost certainly fail. It would distract us from our focus on risk-aversion and the pursuit of excellent long term results, while shifting our attention towards quick gains, short-term trades and market momentum.” Seth Klarman

“We study companies and try to find undervalued securities… We’re absolute value investors focusing on asset values, book value discounts and low price to earnings ratios to normalized earnings. And we aren’t interested in so-called relative values — you know, something selling at 20 times earnings in an industry group with a 35 multiple.” Thomas Graham Kahn

"I’m not interested in buying things because of relative value." Allan Mecham

“We don’t pick stocks on relative possibilities, we pick stocks on absolute possibilities. We never compare stocks with how stocks will fare relative to the Russell.” Chuck Royce

“It’s always more important to us to value a stock relative to its absolute prospects than to other stocks. We all lived through the days when people were buying Internet companies that were really cheap because they were trading for only 10x sales. We’re very careful to always ask ‘Well, what if all the comps are wrong, too?’” Lee Ainslie

"We seek to earn a solid, average absolute return by rational means, avoiding the mythological sirens' call to follow the relative-return crowd." Frank Martin

"Ultimately, investors have to ask themselves whether they are interested in relative or absolute returns. Losing 45 percent while the market drops 50 percent qualifies as market outperformance, but what a pyrrhic victory this would be for most of us." Seth Klarman

"The trouble with institutional investors is that their performance is usually measured relative to their peer group and not by an absolute yardstick. This makes them trend following by definition." George Soros

"Our absolute return focus compels us to think carefully about the risk/reward proposition and how much potential might be in a unit of assumed risk." Steve Romick

"Our goal is to generate good absolute returns with limited downside risk over time." Seth Klarman

"The pressure for short-term performance versus a benchmark can easily disorient the investment brain of a portfolio manager. What should matter is capital enhancement in bull markets and capital preservation in bears; in other words absolute, not relative returns." Barton Biggs

"Our mandate is not to lose money, we want our returns to be as absolute and as positive as possible." Charles De Vaulx

"My job, as manager and fellow owner, is to allocate the vehicle's capital to produce the highest absolute return on invested capital while minimizing the risk of permanent loss of capital." Michael Burry

"We seek absolute returns, not relative ones, and resist being benchmarked against market indices for that reason." Seth Klarman

“Our approach to value can be summarised as absolute rather than relative, whether in the use of discounted cash flows, market ratios or liquidation values. Not only does it seek to determine the value of a business on its own merits but is consistent with the absolute return objective in our whole approach to investment. This is distinct from the approach of other investors. Some employ investment processes that exclude value disciplines at all. Many others use market ratios calculated using current or data forecasted only into the immediate future to compare values with indices or with other companies. This off course assumes that the average value or index value is correct, which we know with the benefit of hindsight is often not the case. Importantly such a dependence on relative value lends itself to the more benchmark orientated investment approach, the antithesis of what we do.” Nick Train

“Nomad is an absolute return fund and reference here to an index is simply to place our performance, short term as it is, in context. We expect to beat the index handsomely over time, but only as a by-product of our absolute return orientation.” Nick Sleep