If you read serious investment writing on any level, you are aware that investment managers are a notorious bunch. For every manager that beats the market, there are a dozen or more who fail to do so. Money managers, as an industry stereotype, tend to talk a big game but provide inconsistent results. Many are the managers who have a hot year or two, draw a big following, only to lose themselves and their clients millions of dollars in the next year. Clearly, many claiming to be oracles are anything but. And yet, there are investment managers who seem able to beat the system reliably. This is the sort of management that investors like Buffett tend to develop and employ, and there are recognized methods that make these sort of managers successful. Here are three.
- Managers like those employed at MFS, are successful because they are many, and because they work as a team. MFS has experts working all over the globe, observing many different market decisions and combining insights which yield sensible advice given to clients. Global markets have been proven to be far beyond the intellectual capabilities of any one human. Individuals miss opportunities and make mistakes. Teams do too, but they’re much less likely to.
- MFS employs stringent risk management techniques. They understand that it is harder to make money than it is to lose it, so they take care at all times, and don’t allow clients to get carried away with excitement when caution is due.
- MFS is involved in the long term success of their clients. Therefore, they don’t chase money that could bring a sudden windfall at the risk of their clients’ stability. They are building clients for life, a technique that could help the performance of just about any investment manager or investment management team.