Short Term Performance Results Will Vary

by | Feb 17, 2016 | Systematic Trading | 0 comments

I have become less active here lately as I was invited to join a project that has nothing to with investing but is very interesting from a personal point of view. Another reason for my lack of frequent posts can be understood from an excellent post by Larry Swedroe at ETF.com.

The post discusses how stock investing strategies which have stood the test of time for many decades will have periods of underperformance. We can expect the duration of underperformance to last as much as ten years. This expectation of underperformance is fundamental to understanding why it is so difficult for us investors to stick with a proven strategy – we hate underperformance and are likely to change strategies when a given strategy underperforms for as little as one year never mind ten years.

With January being such a terrible month for most investors, including me, I went on a financial media diet. I intentionally abstained from watching or reading financial media as much as possible. While the markets tossed and turned, I sat on my hands and not once checked on the performance of my strategies. I wanted to see if I could do that for a month as I hadn’t done it before and it wasn’t difficult at all.

I strongly encourage you to read Swedroe’s article. It is one that I plan to read at least annually.

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