Cloning Buffett

We've always been of the opinion that your investment returns would be better if you could utilize a variety of managers that have distinctive styles and alpha generating approaches. In other words, if you could mix a little Buffett, some Soros, a Druckenmiller and others together you would likely have better performance than mixing a variety of index funds.

Why don't investors do this - what's the catch? Tracking error. What's tracking error? It's the deviation of return from standard indexes. The Buffets and Soros' of the world choose securities because they think they can make money on them - absolute, real money - cold, hard cash. Each invests within a circle of competence that typically produces great returns but may lag the index over short or intermediate periods of time. In contrast, most mutual fund managers choose securities because of their belief they will outperform the index. It doesn't matter if the index is up 10% and they are up 12% or if the index is down 15% and they are down 13% - either way, they outperform by 2%.

This blog is designed with the idea of sharing some of our insights into absolute return investing in a way that is available to the average investor. Through our Registered Investment Advisory firm WindRiver Advisors we track a variety of strategies and offer investors a way to invest in a mix of strategies, many of which are absolute return, some are relative return. We'll discuss some of the things we're doing while we're doing them. --Rick