TIME ARB

"Human nature desires quick results, there is a particular zest in making money quickly, and remoter gains are discounted by the average man at a very high rate." John Maynard Keynes

"Telling a game player that he might make some money in two years is like betting him on how tall the corn will grow and letting him sit on a camp chair in the corn field watching it." Adam Smith

"It is just appalling the nerve strain people put themselves under trying to buy something today and sell it tomorrow. It's a small-win proposition. If you are a truly long-range investor, of which I am practically a vanishing breed, the profits are so tremendously greater." Phil Fisher

"The last man standing is going to be time arbitrage." Joel Greenblatt

“The single greatest edge an investor can have is a long-term orientation.” Seth Klarman

"I would say our edge is the willingness to take a longer view of a business." Glenn Greenberg

“Forget the short run – only the long run matters.” Howard Marks

“The longer you can extend your time horizon the less competitive the game becomes, because most of the world is engaged over a very short time frame.” William Browne

“The vast majority of people compete in a time horizon that's very near dated. There are many fewer investors who are thinking out a decade and beyond.” Matthew McLennon

"What we do is run a long-time-horizon portfolio." Lou Simpson

"Time arbitrage is one of the biggest behavioural advantages anyone can really have… If you can think in three to five year terms, I think it’s a huge advantage. I also think it changes the nature of the work that gets done. I spend much more time on the business analysis and really understanding the quality of the company and less time on number crunching. Over a long period of time, effectively the return on your stock, should approximate the returns of capital the company gets." Munib Islam

“We arbitrage time horizons. Our time horizon is long while for other investors it’s short. When they are panicking we must not panic.” Chuck Royce

“The trick to being a good investor, over the long-term, is to maintain your long-term oriented discipline.” Nick Sleep

“Instead of focusing on the next quarter, investors need to focus on the next decade.” Stephen Paice

“My horizon is 10 to 15 years on average, and at least 5 years.” Bill Stewart

“We own stocks based on what we believe investors should be willing to pay for them five to seven years from now.” Bill Nygren

"The advantage we have is time frame. When I came into the business the average holding period for a mutual fund was seven years. Today it’s less than nine months." Rob Rodriguez

"I think one of the inefficiencies in the market is investors are generically too short-term oriented and time arbitrage is one of the best inefficiencies in the market." David Einhorn

"We rely on concentrated research to identify great businesses that are trading at highly discounted valuations because investors have over-reacted to negative macro or company specific events. That's the time-arbitrage part of the strategy, taking advantage when the market reacts to short-term factors that have little impact on long-term intrinsic values." Bill Ackman

"We have three-to five-year time horizons and basically try to arbitrage the public market’s time horizon.” Jeffrey Ubben

“Time-arbitrage just means exploiting the fact that most investors - institutional, mutual funds or hedge funds - tend to have very short-term horizons, have rapid turnover or are trying to exploit very short term anomalies. So the market looks extremely efficient in the short run. In an environment with massive short-term data overload and with people concerned about minute-to-minute performance, the inefficiencies are likely to be looking out beyond, say, 12 months." Bill Miller

"If everyone else is dashing around pricing assets on the basis of the next three months, then they are likely to mis-price assets for the longer term. So an opportunity for time-arbitrage arises for the investor with a longer horizon." James Montier

“If you look carefully, almost all Old Money secrets can be traced to a single source: a longer-term outlook.“ Bill Bonner

“Greenlight believes the traditional investment horizon is too short because equities are long, if not indefinite duration assets. When we make an investment, we usually don’t have any idea how long we will be invested. If the downside of an opportunity is no short-term return or ‘dead money’, we can live with that. We are happy to hold for more than a year before succeeding. In practice, some “dead money” opportunities work out more quickly than we expect. A portfolio where some investments work quickly, some work more slowly, and the rest retain their value generates exciting results.” David Einhorn

“I think a big part of the edge comes from, we’re not going to do a better job predicting next quarter’s earnings than people who focus on that and we just don’t focus on that at all. What we focus on is what is this business worth over its life? And the markets generally over-react to short-term information and noise, because many stocks are traded on the basis of the marginal buyer and seller is a short-term investor trying to predict whether the stock is going to go up or down on the quarter and we don’t spend any time trying to figure that out. And that kind of activity, whether it’s driven by quantitative traders or computers or fast money, so to speak, moves securities around occasionally to crazy prices.” Bill Ackman

“Perhaps the most obvious difference about our approach is the unusually long time horizon we work with.” Nick Train

“We take a very long term perspective, as if we are buying a business to own the business. We are not thinking about when we are going to sell it. We may choose to sell one of our holdings in a shorter-than-normal time frame for either positive or negative reasons, but that is not what we expect to do when we commit to owning a great franchise.” David Polen

“We’d ideally like to see value created within a year’s time, if not sooner, but we are not short term opportunists. As arbitrageurs of value we are content to invest in longer-term opportunities.” Russell Glass

“Our goal has always been to seek reasonable returns over a very long period of time. I don’t know why anyone would look at a short time horizon. In my life, I invested over decades. Looking for short-term gains doesn’t aid this process.” Irving Kahn

“If you invest the way people gamble at casinos you’re not going to do very well. It’s the long term investment that works best. But if you like the action of investing, sometimes winning, sometimes losing, just like the action in the casino, those people are not my people. I like the long term investors who figure out something that is going to work over the long term and buy that.” Charlie Munger

“What we do from others is to maintain a very long time horizon. In our industry this is a luxury, as many other investment firms have clients that don’t let them do this. As a result of having a very long time horizon, we can sit back and logically imagine a very different environment than the one we are in today. We are looking for themes that will produce epic investment results.” William Strong

"The majority of our outside capital has lock-up terms that help us take advantage of time-horizon arbitrage - a flexibility most investors don't have." William Martin

"The large inefficiencies do not get arbitraged out because there's very little capital that gets allocated toward extracting value over multiple years." Jim Leitner

“It’s still true that the biggest players in the public markets – particularly mutual funds and hedge funds – are not good at taking short-term pain for long-term gain. The money’s very quick to move if performance falls off over short periods of time. We don’t worry about headline risk – once we believe in an asset, we’re buying more on any dips because we’re focused on the end game three or four years out.” Jeffrey Ubben

“I have never been good at picking stocks over a one-year horizon - in fact, I have always guided toward measuring success over a three-year period.” Ted Weschler

“Time is our friend. Today there’s so much money chasing quarterly performance or driven by program trading, index funds or ETFs. That leaves a real opportunity for fundamental investors like us who are looking out two to four years to find inflections in businesses which aren’t currently appreciated by the market.” Joe Wolf

“Few investors are willing to take the long view because they’re forced – because of career risk or because of their own behavior – to worry about the next 6 months.” John Huber

“The longer you’re willing to hold, the less crowded the opportunities are.” Richard Perry

“I think the key for us is to mantain our core philosophy of long-term investing. As long as we still believe in our position, we won't let the markets change our mind." Chris Hohn

"Long-term investing works because there is less competition for really valuable bits of information." Marathon Asset Management

"A good idea, a long-term perspective, and the creativity to implement a strategy to profit from your insight are necessary to prosper in finance." Leon Levy

“Only by looking further out than the short term crowd can we expect to beat them.” Nick Sleep

"The more I mature as an investor, the more I appreciate the absolute immeasurable competitive advantage time horizon has on Mr. Market." Christopher Begg

"I think Bestinver's competitive advantage is that it has a very long-term investment approach." Francisco Garcia Parames

“We are long range investors; our average holding period is 6 years.” Sir John Templeton

“While many of the businesses we invest in are already well known to investors, our concentration on each business’ long-term valuation rather than its near-term prospects offers an advantage in that many investors don’t look out as far as we do. Accordingly, we believe that part of the investment world is often less efficiently priced and more rewarding.” Bill Stewart

“The investor who is willing to look out three or four years will have a lasting edge because the more money that gets allocated for reasons other than a security’s long-term value, the more likely it is that the security’s price becomes disconnected from that long-term value. The liquidity that is provided by short-term traders adds to the volatility of stock prices, which creates more opportunities for long term investors. Note that the time horizon edge isn't a magic bullet. There is a reason why investors don't want to own certain stocks at certain times. No one wants to own a stock that they think will go down in the next 6 months, even if they think in three years it will be worth much more. The time horizon edge could be summed up this way: the price of gaining this edge is the volatility that could occur in the near term. You have to be willing to accept the possibility that your stock will go down before it goes up. Very few investors are willing to pay that price, which is why even large cap stocks can become disconnected from their long term fair values.” John Huber

"Our edge is really our behaviour and our long term horizon which is so rare today...the short term horizon of others is probably at the source of many of our investment opportunities because we have a longer term horizon than most people.” Francois Rochon

"Arlington aims to play to our strengths, tailoring policies to encourage long-term investing perspectives. We think this provides a competitive edge and the best chance for long-term success." Allan Mecham

"One thing you can do as a value investor is to arbitrage time and to recognize that you're going to be early, but if you get the right price, it all works out in the end." Preston Athey

"Our edge is a longer term view and an ability to tolerate losing money before we make it." Robert Robotti

"The most profitable kind of investing is long term investing." Li Lu

"Our willingness to act on long term conviction has rewarded Windsor shareholders." John Neff

“Our aim is to exploit the long-term mispricing of assets in a market that is intensely focused on the short term and is less interested in a company’s longer-term growth prospects.” Rajiv Jain

"I believe that I have a very long-term horizon, longer than most investors. I try to behave more like a true owner of companies than a typical equity securities manager." Francois Rochon

"We probably also have a longer term focus than most hedge funds. I would argue in a world where so many funds are so concerned about their returns this month or this quarter, to be able to look out one year, two years or three years really gives us a significant competitive advantage." Lee Ainslie

“For us the key to investing is thinking about how can a company perform three to five years out? What can be great investments over three to five years? Not focused so much on the short term. Try to see the forest from the trees. Think about the long term. Few people in the market think about the long term. And that’s our edge. It’s sort of patience and a longer term thinking.” Phillipe Laffont

"Common situations that result in a mismatch between share price and share value .. may simply be time arbitrage, where we think the business performance looking out 18 to 24 months will be much better than the share price implies." Robert Alpert

"We like to hold names for long periods of time; five, seven, ten years; because that is where you can exploit inefficiencies in the market." Paul Black 

"In a sense, value investing is a large-scale arbitrage between security prices and underlying business value." Seth Klarman

"Our thesis often is based on the passage of time. What makes a negative story negative may just be that the next three to six months - the time space in which Wall Street analysts live - don't look so great." Robert Kleinschmidt

"We are in the arbitrage business, but not in the traditional merger arbitrage sense of the term. We engage in time arbitrage. We tend to buy early, average down, and then wait until our thesis is proven correct, and then we exit. This can happen quickly or it may take years." Steven Romick

"We'll often find opportunity because the market doesn't look out far enough to correctly value durable competitive advantages." Chris Davis

"We have a time frame that is typically longer than most investors have." Mohnish Pabrai

“Be patient and resist the temptation to shorten your time horizon. To quote a good friend and mentor in the investment business, John Griffin, ‘When everyone is compressing their time horizon, you should lengthen yours.’ In late 2008 and early 2009, we made the regrettable mistake of selling good growth companies based on the deteriorating economy because we thought we could time our re-entry at better prices. Good risk management is essential in allowing for greater patience.” Chase Coleman

"Time arbitrage - taking advantage of the opportunity for long-term profit offered when short-term investors sell due to disappointing short-term macro or business progress - has been a major source of profitability at Pershing Square since the inception of the firm." Bill Ackman

"The inability of so many investors and managers to invest with a long term horizon creates the opportunity for time arbitrage - an edge in an investing approach that requires the commitment to long-term holding periods.” Joel Greenblatt

"There must be opportunities if you can construct a platform that will allow you to lean against biases in general. For us, the most important bias was definitely focusing on time preference." Alex Magaro

"We are disinterested in short-term results and thus have the luxury of focusing our research and purchases on the much less competitive universe of stocks that have less promise of near-term appreciation, but that have exciting longer-term potential. This gives us a competitive edge." Ed Wachenheim

"The forecasting horizon trap lures you into spending all your time on what's more knowable - the same immediate horizon that occupies everyone else. If you fall into the trap, competing with all the other investors concentrating on these short term events, it is impossible to outperform the market. You have to escape to a longer term horizon." Ralph Wanger

"Time Horizon Arbitrage .... If there is a free lunch on Wall Street, we feel it is the time horizon perspective." Christopher Begg

“You have to extend your time horizon if you want any chance of doing well. The competition in the space really thins out. You have an opportunity to arbitrage time over others.” William Browne

"I concentrate on a deeper reality: the inputs to future value moves. Our peers are trading shares at the short end of the equity yield curve where the competition is the greatest, and we are investing at the long end where competition is the least. We respond to completely different stimuli." Nick Sleep

“I think that the very best people in business, whether they’re running companies or whether they’re investing, tend to have a pretty good balance between short-term accountability and a long-term horizon. I don’t think that it’s an either-or thing.” David Abrams

"Every decision we make is filtered through our long-term time horizon, even when it negatively impacts our short-term results. Our long-term time horizon, coupled with your patient capital, is a sustainable competitive advantage that is very difficult for many other market participants to duplicate.” CT Fitzpatrick

"Over the last few decades, investors' timeframes have shrunk. They've become obsessed with quarterly returns. In fact, technology now enables them to become distracted by returns on a daily basis, and even minute-by-minute. Thus one way to gain an advantage is by ignoring the ‘noise’ created by the manic swings of others and focussing on the things that matter in the long term." Howard Marks

"If you can invest with a three-to five-year horizon, which is a pretty difficult thing to do—it might sound like it’s an easy thing to do if market conditions are benign, but you throw a 2008 or a 2009 in there and you have to really work hard to remember that this is temporary and that you need to keep on looking out three to five years when you’re making these decisions. Ultimately, that, I think, is an incredibly powerful advantage. And the people that are on the quarter-to-quarter timeframe, they’re going to lose almost certainly. And they’re definitely going to be losing to the managers that are using the three- to five-year horizon. So I do know that it’s possible to extend your time horizon and succeed." David Swenson

“If we just buy a business, we go in with a three to five-year time horizon. That doesn’t mean at the end of it we’re going to sell it at three to five years. Sometimes we do and sometimes we don’t. Sometimes we keep it ten years or longer. I think there has to be a point where sooner than ten years that you’re determining whether you’re being successful or not successful. I don’t think that waiting ten years to figure out whether you’re going to be successful or not is going to be a good path to victory.” David Abrams

"I'm basically doing time arbitrage - finding companies where economic, industry or company-specific disappointments prompt short-term investors to sell me their shares at compelling absolute valuations based on what I consider normal longer-term earnings power." Whitney George

"If you think the same way as most investors and you have the same time horizon, you'll probably end up with the same results." Francois Rochon

”Long-term investors have an advantage over those with short timeframes (and I think the latter describes the majority of market participants these days). Patient investors are able to ignore short-term performance, hold for the long run, and avoid excessive trading costs, while everyone else worries about what’s going to happen in the next month or quarter and therefore trades excessively. In addition, long-term investors can take advantage if illiquid assets become available for purchase at bargain prices.” Howard Marks

“Critically, whilst more and more investors have become increasingly short term, desperately seeking immediate results, my approach has remained resolutely long-term. I passionately believe in the vital importance of this long term approach and the need to focus on finding strong and durable businesses which we think offer healthy growth potential over the next five years or more.” James Anderson

“Most large funds have too many institutional imperatives that prevent truly long-term thinking, but those who operate entrepreneurial funds with their own capital invested alongside clients should play where competition is lower, and that occurs on the outskirts of the time spectrum, not in the densely populated arena that is the current quarter. Of course, a long-term mindset doesn’t guarantee results, as stock picking itself is the most critically important factor in investment success, but it’s hard to overstate the value in the behavioral edge that can be garnered by even an average individual stock picker who simply ignores the noise, avoids complexity, and focuses on great companies with a long-term owner’s mindset.” John Huber

“It’s a long-term game. There are a lot of people who are very smart who are trying to gauge what the next quarter is going to be, they count how many trucks pass this one factory, and there are tons of people that are very good at that. Maybe AI in the future can do an even better job. But there is not a lot of people focusing on “what this business will look like in ten years?”, “is this organisation built to last?”, “what are the type of people behind this organisation?”. That’s what we think about at Hillhouse.” Lei Zhang

“The wider market obsesses about short-term issues: sentiment, quarterly news flow and economic cycles. We think what counts in the long term are societal and technological changes (the megatrends mentioned above), the attitudes of management teams and the culture of the businesses we invest in.” Baillie Gifford

“Time Arbitrage: The ability to invest on a longer time horizon than most other people is one of Hayden’s most important advantages. Institutional investors are increasingly seeking low-volatility returns, and have resorted to investing in short-term ‘events’ to achieve this. As a result, average holding periods have decreased to less than 18 months today. This is great opportunity for long-term investors and Hayden Capital. If we’re willing to look beyond the market’s horizon of 18 months, we can receive the value of future positive developments for free.” Fred Liu

“Near-term events are subject to any number of influences: executional variability, the whims of the economy, even the weather! A few quarters or years is barely enough time for larger forces to begin working. By contrast, endgames can be predictable because they are so far into the future that feedback loops, quality, and overwhelming logic will have had plenty of time to play out. For me, long-term investing means letting go of the path’s false comfort and embracing deeper currents.” Josh Tarasoff

Further Reading:
‘The Arbitrage Series: Part 3 - Time Arbitrage,’ Investment Masters Class. 2017.