Success
|
The toughest thing about
success is that you’ve got to keep on being a success.
Irving Berlin |
Maintaining top
performance is a difficult task in any demanding endeavor. A
history of top performance creates a magnified expectation
of not only future performance but also of, perhaps
unrealistically, consistent top performance. Whether one is
a top-tier athlete (e.g. Lance Armstrong) or portfolio
manager, the drive to maintain high achievement levels is
intense and grows in crescendo.
The fact is that no one person,
company or organization can consistently keep up a winning performance
without a break. Nonetheless, hope springs eternal and we all try. For
instance, it is interesting to note that, Bill Miller, one of the finest
investment managers of our generation, just broke his 15-year streak of
beating the Standard & Poor’s 500 index in 2006. As reported by the
National Post on January 5, 2007:
“Mr. Miller’s US $21-billion Legg
Mason Value Trust rose 5.9% last year, trailing all 107 competing
“multicap value” mutual funds tracked by Bloomberg that buy stocks
managers perceive as being cheap. The Legg Mason fund had beaten the S&P
500 every year since 1991, rising at an average rate of 15.7%, topping the
11.8% advance of the US stock benchmark. … Mr. Miller wasn’t the only
well-known value investor to trail the S&P 500 in 2006. Ronald
MuhlenKamp’s US$2.9 billion MuhlenKamp Fund returned 4.1%. Manu Daftary,
who had the second-longest streak of beating the S&P 500 at eight years,
also struggled. His US$967-million Quaker Strategic Growth Fund increased
5.1%”
Winning streaks or success are
tougher and tougher to maintain as time marches on and the risk of
shattering a successful streak becomes greater and greater. However,
breaking a streak does not imply that an investment manager, pro football
team or high-scoring, talented hockey player has suddenly become stupid or
lacking in talent. The fact is that streaks or great runs of success, in
real life, are meant to be broken or interrupted.
The challenge to professional
athletes, as well as investment managers, is to disregard short-term
disappointment and return to performance excellence. While this is not
always easy to accomplish, it remains the distinctive standard between the
mediocre and extraordinary individual or organization. This point was best
highlighted by General George S. Patton when he declared “success is how
high you bounce when you hit bottom”. This statement, I believe, is
well-worth remembering.
Irwin A. Michael, CFA
