This article is excerpted from a letter by Christopher Tsai, president and chief investment officer of Tsai Capital Corporation.
“In the short run, the market is a voting machine but in the long run it is a weighing machine.” –Benjamin Graham
I provide this quotation to illustrate that short-term performance data provides little assistance in evaluating investment performance over the long-term. It is in the nature of the stock market for there to be constant price action, which is often amplified by human emotions, thus resulting in the inevitable short-term outperformance, or underperformance, by any a money manager. Over the long run, however, this price action phenomenon balances out, leaving the stock-picking ability – or business-picking ability, rather – as the sole driver of investment returns. Incidentally, very few money managers outperform the S&P 500 Index over the long run. It is on this basis, and this basis alone, that I recommend to use the S&P 500 Index as our long-term benchmark.
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About The Author: Christopher Tsai
Christopher is President and Chief Investment Officer of Tsai Capital Corporation, a global equity manager headquartered in New York City. He founded the company in 1997 and is Chairperson of the firm’s Advisory Committee. Christopher pursues a value-oriented investment approach and seeks high-quality, growth companies that offer significant upside potential and a margin of safety at the time of purchase. He is a member of the CFA Society New York and previously served on the board of directors of untapt inc. Christopher has been profiled in numerous financial publications including Barron’s, Bloomberg, Financial Planning, Investment Advisor Magazine, The Wall Street Transcript and Wealth Management Magazine. He has been interviewed by Bloomberg Radio, China Money Network, Fox Business Network, Nasdaq, and Yahoo Finance Live. Prior to forming Tsai Capital, he was an equity analyst at Bear, Stearns & Co. Inc., John A. Levin & Co., Inc., and Gabelli Asset Management. Christopher has been a benefactor of numerous museums and cultural institutions including The Museum of Modern Art, the Serpentine Gallery Pavilion, the Solomon R. Guggenheim Museum, the World Monuments Fund and The Jewish Museum, where he is a founding member of the Contemporary Circle. When not looking at businesses, he loves running in nature, quiet time with his books and family, submersing himself in the arts and a perfectly steeped pot of tea. He received a Bachelor of Arts degree in philosophy and international politics from Middlebury College.
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