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Slow and Steady Wins the Race--in the Land of Make-Believe

Long-term outperformance is a rocky road requiring patience and resolve.


Howard Marks is the co-chairman of Oaktree Capital Management, a well-known bond and alternatives investing specialist. Marks is a legend in asset-management circles, having amassed an outstanding record, and his memos are considered de rigueur within the corridors of Wall Street and well beyond (Warren Buffett is one of Marks' most devoted readers). One such memo, "The Route to Performance," was published in 1990:

"As an alternative, I would like to cite the approach of a major Midwest pension plan whose director I spoke with last month. The return on the plan's equities over the past 14 years, under the direction of this man and his predecessors, has been way ahead of the S&P 500. He shared with me what he considered the key: "We have never had a year below the 47th percentile over that period or, until 1990, above the 27th percentile. As a result, we are in the fourth percentile for the 14-year period as a whole.' "

Jeffrey Ptak does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.