I don’t really understand what was so bad about this particular performance. The Model Portfolio team had a strong buy thesis and a view of a fair value-based discount, but one earnings report after another proved the market right and the company’s current valuation to be on solid ground. As soon as an opportunity arose, the laggard was sold at a perfectly acceptable price instead of waiting for years for a hopeful rise that might never come. This is how it should be.
The pressure is naturally high now, as the entire investing public awaits the pearl investment into which these surplus cash reserves will be placed, and how the Model Portfolio’s tarnished reputation will be saved. Hopefully, we will finally dare to try small-cap investing again. Everything else has been tried in recent years, and there haven’t been many successes for the current strategy, so in my opinion, there’s nothing to lose by changing the investment style back to the Model Portfolio’s traditional bold, high-return stock picking. This shift in the Model Portfolio’s stock picking focus to quality companies/value laggards has proven to be a mistake, and now it’s time to correct it.