Yahoo! Finance published the following interview with Michael Mauboussin, author of Think Twice: Harnessing the Power of Counterintuition and chief investment strategist at Legg Mason Capital Management, home of legendary (active) fund manager Bill Miller.
Miller famously beat the S&P 500 for 15 consecutive years starting in the 1990s, only to take a bath during the market crash in 2008, when the Legg Mason Value Trust fell a staggering 55%.
Stellar performance is "a combination of skill and luck," Mauboussin concedes, and even Miller has often cited the role luck played during his years of outperformance.
But just like the best athletes, his research shows the best investors also have tremendous skills and tend to display the following characteristics:
Contrarian
Value oriented
Employ a repeatable process.
Value oriented
Employ a repeatable process.
This last point is probably the most important. Retail investors should emphasis the process, not just results. And like a stock reverting to the mean, the best investors will likely rebound from a down year or two.
http://cosmos.bcst.yahoo.com/up/fop/embedflv/swf/fop_wrapper.swf?id=15964337&autoStart=0&prepanelEnable=1&infopanelEnable=1&carouselEnable
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