[ SHORT-TERMISM ]
“ There is more often a long wait for market recognition of the opportunity identified and interest to reverse from whatever has caused general disgust in the stock in the first place ”
short holding period if the anomaly unwinds rapidly . “ However , there is more often a long wait for market recognition of the opportunity identified and interest to reverse from whatever has caused general disgust in the stock in the first place and , therefore , an agonising patience is required until the significant return is generated .” Clothier says a good example came in 1999 when value investors were mocked for buying consumer goods , tobacco and healthcare names , many of which had dividend yields higher than their P / E multiples . “ The ‘ crowd ’ was buying dotcom stocks , most of which went bust , while over the following decade the likes of Reckitt Benckiser , Imperial Tobacco and Novo Nordisk went up 10 to 20 fold ,” he adds .
A dissenting voice Felix Wintle , who runs VT Tyndall North American , is one of the few fund managers willing to admit it sometimes pays to take a short-term view , pointing out that buying and holding quality companies is not the only way to make money from the stock market . “ The whole industry has got so used to talking about how everyone is a long-term investor ,” he says . “ That ’ s de facto the right way of thinking about things , but what does it mean ? Does that mean buying and holding and never selling ? It ’ s something we should talk about because if you ’ re in the wrong stocks over the long term , it is a disaster .” While Wintle aims to outperform over the long term , he breaks this down into a number of shorter periods . He then uses a model to work out where we are in the current cycle and the areas of the market that should do best at this stage . “ The US is in a recovery , with growth accelerating quickly , while bond yields have gone from 60 to 140bps in a flash ,” he continues . “ That ’ s important because now you want to be in cyclical names such as industrials , commodities and energy ,
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