Our long term returns, including the last 5 years have been decent, but not without the usual bumps. For example, we had a rough 2022
At the end of 2022, we wrote the following to our subscribers
I am not happy with the performance. I am not going to share excuses around the Fed increasing rates, rising inflation and so on. Instead, we will analyze what went wrong and change our process
We got a few emails which reminded us of this saying ā If you torture data long enough, it will confess to anything
Some of our subscribers sliced and diced the data to point out that we had lost our edge. Our last 1,3,5-year performance was not upto the mark. On twitter, where we could still share our performance at that time (SEBI does not allow that now), the comments were even more pointed
Suffice to say, we are not getting any such analysis now. Does it mean that we have regained our edge back? That is not the case. The last few years show the volatile nature of returns over the long run and the pitfall of reading too much into near term performance
With the hindsight of 14 years of public returns (and another 12 years of private investing), it is obvious to us that an above average long-term track record will have periods of great performance (2014/2017/2023) mixed with subpar performance (2018/2022). A few bad decisions or bad luck can ruin the performance for short periods of time
As we have shared in our notes to our suscribers, we are constantly learning and reflecting on our process. This is not a one-time event.
We have been doing this every day for the last 25 years and will continue to do so. We do it because we love the process and craft of investing. If it was only for the money, we would have stopped a long time back.
There are easier ways to make money
Continuous evolution
The problem is that there is no objective way to demonstrate this progress. The only indicator is the returns which are sporadic and noisy. Even as we evolved in 2021 and 2022, our returns were sub-par. There has been no change to our mindset in the last 2 years even though the returns are better. One must give time for the effort to reflect in the results
At the risk of sounding self-serving, that is the reason why we insist on patience from our subscribers
In our personal life, we have the same auditor, tax advisors and a few other service providers. We have stuck with them as they meet our needs adequately and are easy to work with. Our hope is that our clients will operate in the same manner for their long term benefit. Those who have adopted this approach with us have benefited in the long run
