RhubarbXIV

16.2%, but good guess.

1. Ancient Art: Quincy Lee (15.0%) 2. Mittleman: Chris Mittleman (19.1%) 3. Giverny: Francois Rochon (17.5%) 4. Arlington: Mecham (17.6%) Results 2010-2015ye

I don't agree that the numbers are bad across the board. I mean, I'm a grown-ass man, I don't need to dump cheerios on my head whenever I see an expert strike out against a simple algorithm a few times in a row. Most of the funds I listed above still made 6-11% net annualized, which seems to me about in line with what I'd expect from a good fund charging 1-3% annual fees. If they'd all been down like 5% annualized, it'd be a different story, but nobody was. I really don't blame any of them for not keeping up with the S&P when it's on an unsustainable tear of 13% ann. If you want better than 6-11% you've probably got to do it yourself and really put your back into it. I have no idea who on that list will outperform for the 2016-2020 interval, which is really what's important. I suspect some are more likely than others, but I'll keep my opinions to myself for now. Usually when I like an investor that just means they agree with me- probably my worst habit. Maybe in some ways the whole "let the market be your servant not your master" thing might apply here, too. Some good funds are open to new investors for the first time in a long time, there's pressure on fees, etc. Seeing fund flows chase market ETFs at something like 8:1 relative to active managers, maybe the herd thins a bit. Maybe the ETF liquidity paradox breaks. Just try not to be so preoccupied with what everyone else is doing, e.g. the market. Yeah, the S&P500 got laid a lot in high school, but I figure the only way to succeed at investing is to just "do you," whatever that may mean.

Good luck getting Buffett to retire. ::) Yeah, I guess 2015 book value might get him there... :'( Edit: BTW, I found a loophole for Buffett. He's now running a company and not an investment vehicle. Company leaders don't have to close the shop if they underperform... wait but why? :P Hate to break it to you, but he's been in the trailing-5-year BV doghouse since 2009-2013. But also, I don't give a shit. I dig his style.

Good luck getting Buffett to retire. ::)

So for how long does XXX has to underperform to be able to shit on it without being judged as harsh? "This guy is a really great investor! He has underperformed for 20 years only! Wait a bit, he's gonna show you!" Again, wrong question. To judge skill by yearly performance alone could require more than a lifetime's worth of results, depending on your minimal required "alpha" for it to count and the level of certainty you're looking for that it exists. Trying to find a 1-2% effect in a data set where returns aren't distributed normally and have an average of ~9% plus or minus 20% (1915-2015 inflation-adjusted) you'd have to wait until damn near the heat-death of the universe to find small and statistically significant "alpha." You've got to beat the market by a lot for a long time for trailing performance figures to say much about your skill at investing. Buffett, Tepper, Greenblatt, etc. and maybe a few vampires (my hat's off to anyone who can beat the market by 1-2% over 600 years) are really the only ones we can assume to be skillful based on past performance alone. As a general guide, if you're looking at trailing results "do not shit lest ye be shat upon." If you want to find someone you CAN safely shit upon, pull up SeekingAlpha and just go wild in the comments section of the first writeup you find by an analyst who hasn't figured out how to read a 10k. Investing is about making good decisions in the future. If you want to judge other investors, do it by how well you understand and appreciate their process, not by what they've done. There are some real dufuses out there who don't do their homework and probably shouldn't be in business, but once you're past that hurdle, it's got to be about what you like. Past performance is just another method of data-mining.

That "my stupid ass" is just my personal results over the past five years in my personal account.

I think market efficiency is a straw man. Whenever I hear "the market is more efficient nowadays" I substitute in my head "the factor(s) I associate with investment acumen has recently performed poorly" and it makes a lot more sense. An analog might be chess. Consider that the goal never changes: capturing the king [earning a high return on capital]. Over the years the number of avid tournament-level players has varied significantly, but the Elo rating system makes it fairly easy to make informed comparisons between players of different eras- Alekhine v. Carlsen or Morphy v. Anand (top players of different eras) would still make for some great chess. Despite that the goal never changes, the pieces never change, the rules never change, and the skill of top players hasn't changed dramatically, chess openings DO go in and out of style over time. Until the interwar era basically nobody opened d4, but today it happens almost as often as e4. The game itself changes. "P/B beats the market" - sure, and it should, until B becomes less important to the generation of E "Low PE beats the market" - sure, and it should, until the business cycle loads you up with levered cyclicals or failing banks "High ROIC beats the market" - sure, and it should, unless the price you pay gives the market too much time to catch up while your returns converge to the ROIC "Low EV/EBITDA beats the market" "Activism beats the market" -you can see where I'm going with this. So you've got two choices: 1. do something that makes sense in the EXTREME long-term and stick to it come hell or high water for 10-30 years 2. adopt a more fluid adaptive approach and embrace the possibility that you might REALLY screw it up at some point that would take 10+ years to recover from Either way, nobody said it was easy. Some folks get good bounces early, some get 'em late, some not at all, but we're all just playing the odds. SO. For your edification I've compiled a short list of managers who have beaten the market (S&P500) substantially ITD, and yet have underperformed significantly in the past five years to 2015-12-31. References NOT available upon request. Many of the listed funds do not publicly disclose returns. The S&P 500 returned 12.6% 2011-2015, these folks all returned less. Alphabetically: Al Frank Aquamarine (Guy Spier) Ariel Auxier Baupost Berkshire (BV) Chou Cundill Daruma Fairfax Fairholme (Berkowitz) First Eagle FPA Crescent Hancock (Pzena) Horizon Kinetics (Murray Stahl) Longleaf My stupid ass Omega Pabrai Pershing Square (Ackman) Punch Card Royce Russell 2000 (whoever the hell he is) Semper Vic (Tom Russo) Sequoia Third Point (Dan Loeb) Wasatch Yacktman So did someone release an odorless, colorless, tasteless neurotoxin in Omaha at Buffetjam '09? Did these funds suddenly get too big to perform? Probably not (most are well below peak pre-crisis AUM). I also know some smaller guys who just work by themselves and do pretty great, even without satellites (although I do know a guy who speaks Swedish, so maybe that's what it takes nowadays). So is thinking over? Because too many people are doin' it? Doubtful. Maybe? If so, not for long. I've seen something like this before. But there's no guarantee this time will end with us doing donuts of joy in the AZO parking lot while the dotcom unicorns rip the copper out of their office walls for beer money. Regardless, we've gotta try, right? That's why were here after all.

I'm not convinced saturated fats are all that bad.

The party/card game Spyfall. http://www.amazon.com/gp/product/B00YTHN82W?keywords=spyfall&qid=1452548929&ref_=sr_1_2&s=toys-and-games&sr=1-2 With the leftover money I'd include Codenames, Exploding Kittens, and Funemployed.

Some of this is covered in the Fortune piece Shai linked to above.

I've been reading a lot of Cal Newport lately, and have had some good success interviewing value managers to learn about their process. I find specific process-oriented questions to be the most helpful way to lean and improve- "teach a man to fish," etc, etc. Here are my suggestions: Describe the process, begin to end of the last new investment you've made. Describe your average day. What made you think you were ready to go out on your own? What is different about your approach that yields better results? What has been the hardest period for you in terms of self-doubt/performance/the mental game? How many hours per week do you work? What do you do to relax?

My wish list would probably include the following (forgive me if any of these dudes have already been covered): Quincy Lee- Ancient Art/Teton J Carlo Cannell- Cannell Capital John Petry- Sessa Bill Beisswanger- Swift Run Capital (and Ted Weschler's sole analyst at Peninsula) Chris Mittleman- Mittleman Brothers Jamie Mai- Cornwall Capital Michael Blitzer- Kingstown Capital

Yeah, and as a bonus, the "Little Book" has trailed the market significantly since 2010 or so, so it'll teach the pre-teen patience if nothing else!

It might seem a bit patronizing, but what about Buffett's Secret Millionaire's Club? http://www.amazon.com/Secret-Millionaires-Club-Buffetts-Business/dp/1118494598/ref=sr_1_1?ie=UTF8&qid=1448896329&sr=8-1&keywords=secret+millionaires+club Or, the follow-up: How to Start Your Very First Business: http://www.amazon.com/Business-Warren-Buffetts-Secret-Millionaires/dp/1941367119/ref=pd_bxgy_14_img_3?ie=UTF8&refRID=0SNZ3BRY62QZF49409M8 I'm a 34-year-old PM and I still got something out of them. Or even Greenblatt's The Little Book that Beats The Market: http://www.amazon.com/Little-Book-Still-Beats-Market/dp/0470624159/ref=sr_1_1?s=books&ie=UTF8&qid=1448896417&sr=1-1&keywords=the+little+book+that+beats+the+market But honestly, I have no idea what this particular 12-year-old's reading habits and level are.

I think what the article totally misses is that the vast majority of GTC and Stop orders are actually broker-dealer side, not exchange-side. This change will seemingly have minimal impact on the way anyone trades, but it makes for good headlines seeing the NYSE "protecting the small investor."

I think the "outside" topics are probably a good thing. Keeps folks off the streets. Everybody needs a hobby when the risk/rewards, or effort/outcome if you will, rise to high levels. After all, didn't Charlie say Warren does merger arbitrage to stay out of bars?

This is as close as I get: https://www.youtube.com/watch?v=gD1Jr7PfvSQ George Clinton forever.

At 19:00 he shows a chart of his fund net of fees against the market. Looks like a beat to me. Not anything ludicrous (178% v 120% over 16 years), but squeaking out a win. Most of the outperformance came during the internet bubble bursting, but that's true of most value investors who started in the blessed 1999-2000 vintage. I have a strong distaste for his overlong presentations, his weakly supported theses, and his overly promotional attitude. But let's at least give him credit for what appear to be the facts. If I were lying, I'd show a hell of a lot more outperformance than 3.2% over 16 years, so I'm inclined to take him at his word.

This is consistent with my information. I doubt Klarman (or his LPs) are the least bit restless having underperformed since 2008. Investing responsibly for the long term requires a certain insouciance that comes out of confidence in one's methods and a process-not-results focus. Klarman is the king of that in my opinion.

Baupost was indeed founded in 1982, but this is a distinct but similar series of Baupost Funds. The inception of this precise fund is the date stated, and the returns are for that interval. All figures as of 10/31/2000. Taken right from the letter. I should have added earlier that I deeply admire Mohnish as a person. He's basically worked for free for the past seven years and with this year being down shows no sign of slowing down. He saw that his clients were made whole after 2008 and then some and stuck to his original deal. I have the greatest respect for someone who conducts his business that way regardless of what differences of opinion we have over investing methodology. And I'm not just saying that because he bought me dinner and gave me a nice book. I think Wall St. ought to "clone" his ethics and generosity.

I'm going out on a limb a bit sharing this, and it's a slightly different interval than I quoted before (which was based on some old notes I did on the back of his 1999 letter), but this is from 10/31/2000: 1 Year: Baupost 22.43%, S&P 6.09% 5 Year: Baupost 11.55%, S&P 21.67% Life of Fund (12/14/1990): Baupost 13.19%, S&P 18.78% How's that for patience and sticking to your guns? I think we could all learn a thing or two from this guy.

I know Pabrai, I have seen his performance figures and I also run my own fund so I feel qualified to address some of the speculation. 1. His returns are good. He ain't Gotham 1985-1995, but in his longest running fund, his returns are about in line with the market over the past five years or so (seven years if you're careful to lump 2007-2009 together). To put that in context, consider that very few funds are going to have an easy time keeping up in a period of QE and high volatility followed by basically five years of 16% straight up for the S&P. Klarman lagged badly for ten years from 1990-1999, returning 11.8% vs 19% (don't have it in front of me, but pretty sure that's right), and Einhorn hasn't been on fire lately, either. The HFR Fundamental Value index is at about 7.5% ann. for 5 years, and the Magic Formula has been cold since the crisis. With the exception of the HFR index, I have confidence these are all good bets to beat the market over a lifetime-length period. 2. Fund marketing is a regulatory landmine. In short, when setting up a fund, you can decide where the burden of proof lies to determine who is accredited and not. I AM NOT A LAWYER SO CUM GRANO SALIS, but as I understand it, if the fund performs DD on each LP to determine qualified status then they can market freely under the JOBS act (very few choose this option). The much safer election is to leave the burden of proof on the investor to state that they in fact are qualified, but only market to those self-identified as qualified. The line between marketing and not-marketing is so blurry it's best just to stay the hell away from it talking about your fund's returns. Not "illegal" per se, but it is a massive headache getting anywhere near that line. Part of the reason I don't post here as much as I'd like. 3. Contradiction is the hallmark of a well-developed investor. Buffet warns people about derivatives and sells S&P puts. He bought Gen Re for heaven's sake. I talk freely about stocks I own with friends and colleagues. With the public, less so. Especially if I'm buying/selling/stalking a position. I trade so infrequently I'm usually not worried about it though, but part of being a "Guru" with your interview in Barron's is that you're going to see a lot of pikers crowd you in a trade where you haven't got a full position yet (I'll bet he's got as much GM/WS as he wants, same for Hyundai Prefs). 4. Would I invest with him? No. I run my own fund. I can't discuss returns here. I don't see evidence that he does the level of DD on his investments I would like to see for someone so concentrated. I'm very concentrated, but neurotic about understanding as much as I can about everything. And I NEVER rely on someone else owning something as support for an investment thesis. I prospect in 13Fs, yes, but I'll never jump in a position until I've exhausted myself trying to understand it. I (and my LPs) have nobody to blame but myself when something goes wrong. "But Lou Simpson owns it" is not an excuse I can imagine giving.

[amazonsearch]Being Mortal: Medicine and What Matters in the End[/amazonsearch] I just got this book from Mohnish as a year-end gift (classy guy!). If it's Mohnish's book of the year, I figured that would be an important endorsement for the board. I'm interested in the topic (it was already in my Amazon wishlist), so I'll try to report back once I've gotten to it. But it's both book season and holiday season now, so I have the most new stuff to read and the least time in which to read. Just thought the board might want to know.

When I read the title of the post I wondered if that would make Obi-Wan Kenobi a short seller. Although, I could see him being the type to own a lot of gold, too.