Originally Posted by
Trip7
18% IRR over the last 5 years, slightly less than my target 20%+ due to some rookie mistakes early on. Joel Greenblatt and Warren Buffet both achieved 50%+ IRRs in their early days when they managed small funds. Once an an investor hits $40-50m AUM getting those types of returns becomes significantly harder.
As far as Bear Market for my strategy and psychology, a Bear Market isn't scary, it's my Christmas present. The beautiful thing about value investing is it gives you a sense of conviction about what your assets are worth, and you buy well below that valuation for a margin of safety. Moreover, value investors tend to treat stocks as part ownership in an operating business, not pieces of paper with a price flashing minute by minute M-F 9:30am-4pm.
I own anywhere from 12-18 operationing businesses bought at very reasonable prices. If we dip into a bear market and more shares of these companies are overed to me at a low price because investors are fleeing for liquidity, I will gladly help them out with their plight.
The stock market is quite an oddity. It's the only market where when there is a huge sale, there's more folks running out the door than in.
I read an article a few years ago discussing how this mentality has shifted. Over many decades during market downturns most people panicked and wanted to sell stocks, so the job of advisors was the caution patience and try to keep their clients from making a bad decision. Now during many market hiccups there can more more buying activity by individual investors even as major hedge funds actually trim some of their holdings. So in some respects that traditional model has flipped. I'm not sure if that would hold true in a major, longer term bear market, but it holds true for most of the minor drops along the way.