Thomas E. Finser
Personal Long-Term Objectives
A multi-year time horizon is the foundation of my approach. Used judiciously, a multi-year outlook acts as a filter for compelling, asymmetric risk-reward opportunities unrecognized by a focus on quarterly and annual results.
I run a multi-year marathon to maximize the total cumulative return on investment adjusted for portfolio cash inflows (or outflows) over a minimum of five years. In this race, I succeed if I
Following the bottom-up, long-term strategy outlined here, I cannot and will not manage investments to meet any given quarterly or yearly benchmark. I am running a marathon, not an endless string of 365-day sprints. Calculating total return performance on a short-term basis is like watching water boil. It is counterproductive to my game and causes long-lasting brain damage.
It thus becomes critical for Seeking Alpha readers to understand my short-term expectations as well. I expect periods of market under-performance and price volatility, especially when measured on a quarterly or year-over-year basis. The results might appear bad for a significant portion of the overall holding period. One should expect a higher-than-average standard deviation in the short term and a payoff of higher-than-average IRR over a minimum of five years. My aim is to maximize absolute, long-term return regardless of interim stock-price volatility.
A multi-year time horizon is the foundation of my approach. Used judiciously, a multi-year outlook acts as a filter for compelling, asymmetric risk-reward opportunities unrecognized by a focus on quarterly and annual results.
I run a multi-year marathon to maximize the total cumulative return on investment adjusted for portfolio cash inflows (or outflows) over a minimum of five years. In this race, I succeed if I
- Protect investment principal from permanent loss of purchasing power
- Deliver IRR in excess of the cost of capital.
- Maximize unlevered IRR over a minimum five-year basis
Following the bottom-up, long-term strategy outlined here, I cannot and will not manage investments to meet any given quarterly or yearly benchmark. I am running a marathon, not an endless string of 365-day sprints. Calculating total return performance on a short-term basis is like watching water boil. It is counterproductive to my game and causes long-lasting brain damage.
It thus becomes critical for Seeking Alpha readers to understand my short-term expectations as well. I expect periods of market under-performance and price volatility, especially when measured on a quarterly or year-over-year basis. The results might appear bad for a significant portion of the overall holding period. One should expect a higher-than-average standard deviation in the short term and a payoff of higher-than-average IRR over a minimum of five years. My aim is to maximize absolute, long-term return regardless of interim stock-price volatility.