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There are two ways to beat 'the market'. One is to be a consummate market-timer, being out during the worst days and in on the best days. The other is to be a darned good stock picker or hire a fund manager whose goal is to beat 'the market'. First, what is 'the market'? Since funds have different benchmarks and different indexes they use for comparisons, you need to make this decision. Then you need to have truly active management and most likely a limited number of holdings (or be incredibly talented). And remember that no manager, no matter how talented, beats 'the market' year-in and year-out. Usually the phrase is 'over time', such as 3 or 5-year averages. Perhaps the more valiant goal is to achieve 70-80% of 'the market' upside with only 70-80% of the downside.
Too, there is the question of how consistent Mr. Olstein has been able to accomplish his reachable goal. Roughly speaking, he's outperformed the market in five of the past ten years. Over five years, his returns have beaten 90% of his peers. Over 10 years, they're trailed 75% of them.
Ranked worst to best, here are his 10 year relative returns. He has trailed ...
88% of his peers in 2004 89 33 87 77 29 13 73 32 7% of his peers in 2013.
So five lean years (2004-08), followed by five fat years (2009-13), followed by ... well, the consistent part has been risk (above average to high), expenses (high) and downside capture (above average).
I rather agree with BobC, by the way. If I had to choose between "beat the market" and "manage risk with perhaps a modest asymmetry to the upside," I'd pick - and bet on - the latter.
Yep - Points by BobC & David well taken. As my posts show, I'm very conservative - so the fund likely wouldn't appeal to me other than maybe as a temporary long shot under certain conditions. Was actually just hoping to draw some fire from the Indexers around here - but unusually quiet in that regard:-)
Too bad SEQUX has close d didn't always outperform but was good on the upside downside capture ratio (except in 1999 when I believe it actually lost money (no tech)
OMG, how did this valentine PR piece get published? Just run his performance against (you may know my faves by now) FLPSX, PRBLX, YACKX .... Oh, and do note his threes in M* and Lipper. Bwahahaha. What a racket, to get an NYT writeup. Wonder whom he knows!
Reply to @davidrmoran: Maybe FLPSX, PRBLX & YACKX are also beating the Indexes? I think that was the underlying point. And, yeah - by the guy's own admission he's screwed up a couple times. NYT = Equal Opportunity Flogger
To give him justice, $10 invested in OFAFX since inception in 1999 now would be $29, whereas the same $10 invested in S&P 500 would be $17.6, so he tripled the money, whereas S&P 500 did not even double it. Of course, Oakmark Select during the same time turned $10 into $37. So I guess the last 5 and even 10 years is not a long enough time frame for these managers.
Reply to @jerry: don't you have til the end of today to get into SEQUX if you want? "Effective as of the close of business on December 10, 2013, the Fund will be closed"
Whatever. In Tillinghast's hands the $10 turns into like $57, in Dodson/Ahlsten's hands ~$37, and in Yacktman's hands $49. In Heebner's hands ~$79, not that most can stand those plunges. There are others. (The first three are comparatively steady, unlike Heebner.) Saying you have screwed up a few times, what does that add? Is he worse or better than Weitz and the D&C pack? Gabelli (GABEX) is steadier with the same result, and nobody pens valentines to him. Outrageous article and outrageous that the NYT ran it; for once I agree with the M* and Lipper 3* ratings. And just for kicks, check his performance graph against OAKBX, FPACX, GRSPX, and BERIX since 9/99. Jeez louise.
Comments
Ranked worst to best, here are his 10 year relative returns. He has trailed ...
88% of his peers in 2004
89
33
87
77
29
13
73
32
7% of his peers in 2013.
So five lean years (2004-08), followed by five fat years (2009-13), followed by ... well, the consistent part has been risk (above average to high), expenses (high) and downside capture (above average).
I rather agree with BobC, by the way. If I had to choose between "beat the market" and "manage risk with perhaps a modest asymmetry to the upside," I'd pick - and bet on - the latter.
David
I think that was the underlying point. And, yeah - by the guy's own admission he's screwed up a couple times. NYT = Equal Opportunity Flogger
"Effective as of the close of business on December 10, 2013, the Fund will be closed"