Working The Plan

Working The Plan

by Bo Billeaud on January 15, 2019 The All-Weather Investor

Last year was difficult for virtually all investors worldwide. Indeed, as our 4th Qtr. report illustrated, 2018 was the first year since 1969 that all of the major asset classes declined in value. The WSJ recently reported that the average domestic stock fund declined by roughly 8% last year while the average global fund declined by 14%. You would think that this might put our composite 2018 returns in relatively good standing (please see page 6 of our quarterly newsletter here).

The fact that our returns were higher than last year’s average actually don’t mean a thing. Quite simply, over the short run you cannot judge the job we’re doing by the return number on your year-end report.

Short-term performance results have no bearing on whether or not we are doing a good job. In fact, there is one, and only one, proper measure that matters for investors to judge us by – Are we following our process and discipline? Are we working the plan?

The performance fact sheets and the index sheets we have here in our office clearly show the long-term efficacy of following our programs with unremitting discipline. We truly believe that if we stick to the plan, the future outcome will be just as good.

We’ve talked about the behavioral aspect of investing many times. We all have the ability to be our own best friend or worst enemy when it comes to our portfolios. More often than not – because of the way that we are evolutionarily wired – we often undermine ourselves by reacting exactly opposite of how we should to perceived investment crises. Indeed, that is exactly where the “behavior gap” originates. (please see page 4 of our Q2 2015 quarterly newsletter here).

To be a successful investor, all you really need are four things;

  1. At least half a brain
  2. A well-honed process
  3. A lot of discipline, and finally,
  4. A lot of discipline.

Here at BCM, we can promise you that we wake up each and every day thinking about and striving to meet (all!) those ideals.