Now, perhaps you are skilled at picking the managers with great timing ability, and perhaps those managers do have great timing ability, in which case, good luck. As for me, I prefer to leave the party early, in the knowledge that I can walk away with ease.
In closing, I can’t do better than repeat the words of caution offered by Keynes:
It is the nature of organized investment markets, under the influence of purchasers largely ignorant of what they are buying and speculators who are more concerned with forecasting the next shift of market sentiment than with a reasonable estimate of future yield of capital—assets, that, when disillusion falls upon an overoptimistic and over-bought market, it should fall with sudden and catastrophic force.
James Montier is a member of GMO’s Asset Allocation team. Prior to joining GMO in 2009, he was co-head of Global Strategy at Societe Generale. Montier is the author of several books including Behavioural Investing: A Practitioner’s Guide to Applying Behavioural Finance; Value Investing: Tools and Techniques for Intelligent Investment; and The Little Book of Behavioural Investing. He is a visiting fellow at the University of Durham and a fellow of the Royal Society of Arts. He holds a B.A. in economics from Portsmouth University and an M.Sc. in economics from Warwick University.