We’ve posted about the issue of sticking with your investment strategy before – see here: (VIEW LINK) and here: (VIEW LINK) But it’s a topic that’s worth revisiting. AQR Capital, manager of over US$170B has released a research paper on exactly this subject. They look at Berkshire Hathaway, PIMCO’s Total Return Fund in the Gross era, George Soros’s Quantum Fund, and Fidelity’s Magellan Fund under Peter Lynch and find that the key is having the ability to stick with the strategy through underperformance. “Our findings suggest that success for many great investors is not luck or chance, but in large part reward for long-term exposure to factors that have historically produced excess returns. Thus, a key takeaway for investors is to identify structural edges (factor tilts or otherwise) and then have the patience to stick with them for the long term. Access the full 13-page report titled “Alternative Thinking” here: (VIEW LINK)
Patrick was one of Livewire’s first employees, joining in 2015 after nearly a decade working in insurance, superannuation, and retail banking. He is passionate about investing, with a particular interest in Australian small-caps.