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What does outstanding stock picking look like?

What does outstanding stock picking look like?

Many readers will have some familiarity with the sorts of returns a successful stock-picker might aim to produce. Often, a fund will have an explicit target of beating the market by an amount of, say, 5 per cent per annum over rolling 5-year periods. While it doesn’t sound dramatic, this sort of extra return can compound into a very dramatic difference to investor wealth over long periods of time, and so it is very valuable.

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The seemingly anaemic relationship between forecast return and actual return is what makes an outstanding stock picker. Click To Tweet
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Tim joined Montgomery in July 2012 and is a senior member of the investment team. Prior to this, Tim was an Executive Director in the corporate advisory division of Gresham Partners, where he worked for 17 years. Tim focuses on quant investing and market-neutral strategies.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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3 Comments

  1. Good article Tim. Enjoyed it.
    With the advent and introduction of quantum computing, I would expect the general correlation coefficient to improve in the future, although luck I guess will remain a natural phenomenon. How do you see quantum computing power affecting investing in general?

  2. It’s refreshing to see a hypothetical investor being a female instead of a male for a change.
    It’s also a good point about consistency. Anyone can fluke a good return for a short period of time, but longer investment timeframes show true indications of quality.
    Let’s see what compounding annual returns cryptocurrency “investors” get in future.

    • Despite being highly speculative in the current climate. The future of cryptocurrency and blockchain technology is very bright.

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