I Can’t Define Short-Term Silliness But, Like Justice Stewart, I Know It When I See It by Cliff Asness, AQR
There is just way too much focus on short-term performance. The media write about it constantly, and investor flows in aggregate (not everyone!) seem to follow it too much. We certainly enjoy these stories and flows a lot more when they are in our direction (not a bad picture either, considering the source material), and certainly believe the recent inflows highlighted are a good long-term allocation (that’s mighty big of us, no!?). But we remind everyone that these decisions should be occasional, based on long-term assessments (and even if based on a tactical view, last month’s performance isn’t a great place to start!), and revised rarely. Good strategies will have bad years or even bad multi-year periods, and conversely bad ones will often shine in a world with so much short-term randomness. We (and all other managers, as we’re all in the same boat) are not as good as many implicitly believe when we did great last month (or year or even sometimes longer), and certainly not as dumb as some will think after bad times.
Just a friendly reminder to keep our eyes on the long-term prize.
Gates Capital Management's Excess Cash Flow (ECF) Value Funds have returned 14.5% net over the past 25 years, and in 2021, the fund manager continued to outperform. Due to an "absence of large mistakes" during the year, coupled with an "attractive environment for corporate events," the group's flagship ECF Value Fund, L.P returned 32.7% last Read More
- This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Please note that changes in the rate of exchange of a currency may affect the value, price or income of an investment adversely.Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions, there can be no assurance that actual results will not differ materially from expectations. Past performance is no guarantee of future results. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from AQR.
Information contained on third party websites that AQR Capital Management, LLC, (“AQR”) may link to is not reviewed in its entirety for accuracy and AQR assumes no liability for the information contained on these websites.