I had the pleasure of having dinner with a mutual fund portfolio manager who manages over $8 Billion and who has the impressive record of outperforming the S&P 500 over the past 10 years. In other words, a Wall Street insider and real pro. My apologies upfront for not revealing his name and giving you specifics about him. But frankly, I’m better able to offer my readers more candid insights by allowing him to remain anonymous.
I found some of his pithy comments especially interesting. He said that “in this business, we tend to overcomplicate things.” As I think back over the years, that is certainly the tendency of my students, just as it was of myself as a novice investor. He went on to explain that despite what academics want you to believe, the market is simply not efficient. An equity does have fundamental intrinsic value, but the market is consistently overestimating or underestimating what that true value is. This is precisely why he has been able to outperform the market.