Ben Carlson CFA is one of our favourite reads and this is another great piece..

The simple fact is that short-term performance is usually transient.

The reason why an investment did excellently over the short term is almost certainly because it was out on a limb. And that very same limb can just as soon become it’s downfall.

As the article states:

“…..attempting to achieve a superior long-term record by stringing together a run of top-decile years is unlikely to succeed. Rather, striving to do a little better than average every year…..is:

•less likely to produce extreme volatility,
•less likely to produce huge losses which can’t be recouped and, more importantly,
•more likely to work (given the fact that all of us are only human).”

It really is that simple.

Being consistent and avoiding huge errors results in far superior long term returns.

And that’s all that matters in the end. Which is why we invest client money that way.

CLICK HERE TO READ THE FULL ARTICLE

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