Short Term Performance

"The years says what the days can't tell." Chinese proverb

"Don't be overly impressed with investment firms that have highly successful investment performance records within the recent past." Bennett Goodspeed

“We think fixating on short-term results is bound to harm investment managers and investors alike. High scores are rarely shot while being critiqued mid-swing on each and every hole.” Allan Mecham

Good investment process is not apparent in one quarter’s worth of transient stock price quotations, or one year for that matter.” Nicholas Sleep

“To the extent possible, find and retain like-minded shareholders (and for investment managers, investors) to liberate yourself from short-term performance pressures.” Seth Klarman

"You cannot judge an investor by what they do in six months or a year." Warren Buffett

“We remain critical of attempts to measure investment performance over short periods of time. Even a calendar year is too short for this purpose. It is the time it takes the Earth to go around the Sun and has no natural link to the investment or business cycle other than for agricultural businesses.” Terry Smith

"The pressure for short-term performance versus a benchmark can easily disorient the investment brain of a portfolio manager.. Demanding performance versus a benchmark and focusing on short-term results are the two great banes of investing." Barton Biggs

“Track records can tell you something, but you need a really long history of out-performance to have even a moderate belief. They’re just noisy.” Alex Magaro

"In the short run, it’s difficult to determine whether a great record is due to luck or talent." Warren Buffett

"Short term performance of skill is an imperfect indicator of skill at best.” James Surowiecki

“We place no weight on short-term results, good or bad, and neither should you. In fact, we have and will continue to willingly make decisions that negatively impact short-term performance when we think we can lower risk and improve our long-term returns.” CT Fitzpatrick

Short-term performance envy causes many of the shortcomings that lock most investors into a perpetual cycle of under achievement.” Seth Klarman

"Short-term underperformance may result in the only risk which keeps professional investors awake at night, namely 'career risk'." Marathon Asset Management

"We never take the one-year figure very seriously. After all, why should the time required for a planet to circle the sun synchronize precisely with the time required for business actions to pay off? Instead, we recommend not less than a five year test as a rough yardstick of economic performance." Warren Buffett

“We think short-term measurements are poor assessors of long term ability, and believe sounder judgements are made scrutinising results over longer time frames.” Allan Mecham

“The people that I think are great investors are really characterized by exceptionally low levels of loss and infrequency of bad years. That is one of the reasons why we have to think of great investing in terms of a long time span. Short-term performance is an imposter. The investment business is full of people who got famous for being right once in a row.” Howard Marks

“Return alone—and especially return over short periods of timesays very little about the quality of investment decisions.” Howard Marks

“Short term results often benefit from luck and have no connection with skill. For example, take a short period, not even one or two years long. At any time, even one or two weeks, there will always be some rock stars. In the short term, there will always be winners and losers. But in the long term, there are very few winnersOne, two or three year track records – even three to five years, or even five to ten year track records – are seldom any use for predicting future results. If someone tells me they’ve had good results, say over five or ten years, if I can’t see their actual investment results, I still won’t be able to judge if it’s down to luck or skill – this is one of the core problems judging value investing – is it luck or skill? The market can deliver 14% CAGR’s over consecutive periods of 15 years. In those times you don’t have to be a genius; it’s enough just to be there. But there are other times when returns are negative. Having a good track record in those years is not the same. So it’s very hard to judge performance without seeing the context. But if someone can produce outstanding results over fifteen years or more, then we can probably say they’re something exceptional. It’s safe to say there’s more skill than luck over that time” Li Lu 

“Our preference is for results to be measured over a five-year time frame, and even this may be a little short compared to the average holding period of the underlying investments which is presently around ten years. In this context the short term results remain just that, short-term, and you should be as indifferent towards results so far as the annual sequence in which they have occurred. A stoical disposition to short-term results is both the right way to think (never mark emotions to market) but it also prepares one for results that may be reasonable, but are unlikely to be an extrapolation of the last two years.” Nicholas Sleep

“It’s so obvious to me that you can’t judge portfolio’s results over a few years, considering how irrational and unpredictable market quotations are in the short run” Francois Rochon

“A year is far too short a period to form any kind of an opinion as to investment performance, and measurements based on six months become even more unreliable. One factor that has caused some reluctance on my part to write semi-annual letters is the fear that partners may begin to think in terms of short-term performance which can be most misleading. My own thinking is much more geared to five year performance, preferably with tests of relative results in both strong and weak markets.” Warren Buffett 1960 Partnership letter

“When you are looking at any manager and you’re trying to decide how they’ve done and how they are likely to do in the future, always give the most weight to the long term track record and how it was achieved.” Mohnish Pabrai

"Since a multitude of variables move stock prices around, particularly in the short run, it is virtually impossible to distinguish skill from luck without a large sample size, i.e., a long record." Tweedy Browne & Co

"In investing the edge conferred by skill can be swamped by luck in the short term. So it's virtually impossible to make judgements about someone's skill over short periods of time. A year or a couple of years is vastly too short." Michael Mauboussin

"Evaluating investment managers is like evaluating riders in the Tour de France; a single stage win does not equal a contender, nor does 12 months' performance signify investment ability." Allan Mechum

“We’re trying to win the Tour de France for you. We are not trying to win every stage. Any rider who tried to win every stage would fail and fail to win the Tour as a result.” Terry Smith

"Short-term performance measurements are meaningless, and it is impossible to forecast with any certainty what the relative performance of a manager will be in any given year. In fact, even a several-year span can be misleading, as a manager may be able to achieve above-average results by owning very high-risk stocks in a generally rising market but be virtually wiped out in the same class of stocks in a bear market. The only true test of a money manager's ability is if he can obtain above-average results over a full cycle that includes both bull and bear markets. A great investment manager must be a man 'for all seasons'." Barton Biggs