The answer is that there is no answer

Here are a bunch of excerpts from articles I have been reading that might sway you to conclude that all investment managers are bipolar masochists.

Howard Marks

The truth is, almost everything about superior investing is a two edged sword:

• If you invest, you will lose money if the market declines.
• If you don’t invest, you will miss out on gains if the market rises.

• Market timing will add value if it is done right.
• Buy-and-hold will produce better results if timing can’t be done right.

• Aggressiveness will help when the market rises but hurt when it falls.
• Defensiveness will help when the market falls but hurt when it rises.

• If you concentrate your portfolio, your mistakes will kill you.
• If you diversify, the payoff from your successes will be diminished.

• If you employ leverage, your successes will be magnified.
• If you employ leverage, your mistakes will be magnified.

Source: Dare to be Great II

Cam Hui

Value works. Growth works. Momentum works. Quality works. They just don’t all work at the same time. A combination of these factors work most of the time, but there are times when a single factor is dominant.

You have to be able to recognize the regime shifts and deploy the right combination of models out of your toolkit accordingly.

Source: A quant lesson from a technician

Herb Greenberg

The worst mistakes often come from being too smart for your own good, especially when putting too much trust in your experience, perspective and instincts.

Lessons learnt:

1. The rules of retail can indeed be broken.
2. Never count on the insular feeling of superiority of big, lumbering companies to catch a trend.
3. Don’t overlook the obvious.
4. As long as a company has a product customers fall head-over-heels for, the economics don’t matter until the growth stops.
5. Good execution and a charismatic, brilliant CEO trump making money.

Source: My Worst Mistakes