In an article last year, I used a quote by Seth Klarman that said investing was an "arrogant act". Having just published my 100th article here on Gurufocus, it seems to me being a writer on value investing could fall under the same definition. First, one has to assume that he or she has something valuable to add to the dialogue. Second, one must be able to package this so-called wisdom in such as way to make your points succinctly and in an engaging style. Lastly, the writing must provide readers with an interesting perspective missing in the conversation. Each of these alone is a difficult goal to meet, but achieving a blend of all three really is a leap of faith - and ego.
 
I bring this up because this will be my last article on Gurufocus for the foreseeable future. I have greatly enjoyed meeting you either in person at the GF conference or via the GF website. It means a great deal that so many of you would take the time to read my writing, provide feedback (good and bad!), and ask incredibly astute questions. Without a doubt, the Gurufocus community has made me a better writer and investor.
 
I will likely be posting new articles on Dorfman Value Investments website http://www.dorfmanvalue.com. as well as here or on new sites.  Feel free to visit to get updates and new content. I'm also in the throes of finishing a book that I hope to complete by the fall of 2017. It certainly portends to be an interesting time in both the markets and life in general.
 
As I look back at my writings over the past few years, I realize there has been several key themes. I thought in this last article I would summarize these.
 
Be Ruthless in Reviewing Your Process
All too often you hear about investment managers who remove their losers at the end of the quarter and replace them with stocks that did well. This process is called window dressing and should be a tremendous warning for investors. If a money manager takes the time to fool his investors, it isn’t a real leap before he begins fooling himself. A money manager should spend a great deal of time reviewing his picks’ performance and the process he utilized to select them.  Before I remove or add anything to the portfolio, I write a detailed investment case that includes all my assumptions, estimates, and projections. Each year I review these to assist in writing my annual report. I am always surprised by what I got right - and more importantly – what I got wrong. Is it a fun exercise? Absolutely not. Is it a vital tool? You bet. Always strive to improve your process.   
 
Never Stop Learning
Going hand in hand with the previous topic, never stop learning. One of my favorite stories is the Duke of Wellington’s answer to how he won at Waterloo, “Simple. They came on in the same old way, and we beat them back in the same old way.” Nothing is prone to failure so much as the oft-repeated method of victory. As a famous German general once said, “Victory achieved once brings confidence, multiple victories breed hubris. Do not fight this war using the strategy from the last war”. The key to success on Wall Street is a hybrid approach based on a firm value strategy flexible enough to change with the times. A great example of this was Warren Buffett’s acquisition of Burlington Northern Santa Fe. For decades the railroads had been a capital-intensive business with extremely low margins. The changes driven by intermodal transportation, cost cuts through increased productivity, and better use of assets created an entirely different industry in 2015 than it was in 1960. Buffet’s ability to maintain his value-based approach with a willingness to recognize changes in the railway industry led to a particularly profitable transaction.
 
Revel in the Role of Market Iconoclast
Being different and challenging the major tenets of Wall Street (frequent trading, high costs, etc.) are a must for beating the markets. As Jack Bogle pointed out, “If you invest in the market through an index, your return must be the market return less costs.” Beta – in many cases – is your friend. It might mean the stock doesn’t react the way the markets do, but how else can you beat the these very same markets? In Japanese, the verb to be wrong is “chigaimasu”. Interestingly the verb also means to be different. Most certainly, to be different on Wall Street does not always mean being wrong. Take heart in the fact that many of the most successful investors have been unique in their thinking. 
 
Patience is Your Greatest Asset
I frequently quote the old adage that “to catch the biggest fish you must cast the longest line”. Compounding value takes time. For those lucky enough to double their portfolio in 6 months, I congratulate them. For the vast majority of us, slow and steady wins the race. The ability to be patient is perhaps the hardest trait to develop as a value investor. Everything on Wall Street shrieks action. From day trading to walking sound wave Jim Cramer, Wall Street begs you to take action right now. In most cases, it isn’t you on the winning side of such a bet.
 
Cash: The Once and Future King
One thing has never changed on Wall Street – cash is still king when all else fails. The 2008-2011 market returns showed those with a reasonable amount of cash were prepared to take advantage of depressed prices. In some cases the wisdom to avoid the bubble bursting or the courage to invest near the market bottom made the career of investment managers. In both cases, these managers needed cold hard cash to withstand the drawdown or load up before the bull market of the past seven-plus years. As hard as it may seem, the ability to hold cash – while painful at times – generally provides investors with options essential to success.
 
Leverage: Working with the Devil
The opposite of holding cash is the use of leverage – both on the level of your portfolio holdings (lots of short-term or long-term debt) and your portfolio itself (margin trading). Many people fail to realize that Triple Leveraged Oil Fund can drop just as spectacularly as it might move up. More importantly, margin calls generally happen at the worst of times forcing investors to sell assets at truly unfortunate prices. It’s no different for corporations. Valeant Pharmaceuticals is a walking example of this. The fire sale of its assets forced on the company will likely impair the company’s returns for the foreseeable future.
 
Conclusions
I’ve found following these rules has stood me in good stead through bull and bear markets alike. Is it for everybody? Absolutely not. But if nothing else I suggest investors focus on the first two subjects. Investing requires a solid process. Successful investing means spending the time to learn new approaches, new concepts, and new industries on a daily basis.
 
Thank you again for taking the time to read and comment on my writings over the years. It has been a real honor to be associated with Gurufocus and all of my readers. I wish you the best in your investing future. And for a final time, I look forward to your thoughts and comments.   
 
Disclosure: No conflicts
 

“You can’t always get you want, but sometimes you get what you need”
 
                                                                                    - The Rolling Stones 

“A lot of people ask me what index I use to measure against. I usually laugh and say the Consumer Price Index, that’s what I use. As long as I’m getting what I need for a happy retirement, what the hell do I care what my portfolio is doing versus the Dow Jones Index?”
                                                                                    - Carl A. Adams

“I think every day it's something to reflect on and think about "How do I become less competitive in order that I become more successful?"
 
                                                                                    - Peter Thiel 

Anybody that has worked in the investment world for any stretch of time knows performance versus a proxy defines success or failure. Whether it is the S&P 500 or the MSCI EAFE, investment managers are always feeling pressure to outperform. Much like the nervous groom on wedding night, the reach for something spectacular can lead to stunning failures. In this instance, the groom has a lifetime to prove his case. For the investment manager, it is likely he is looking for a new employer. It isn’t just investment management though being driven by performance. Individual investors pile into funds after a short period of outperformance to see their portfolio suffer an extreme regression to the mean. Most studies have shown an alarming gap between investor returns versus fund returns. 
 
So if the drive for outperformance leads many into unwise investments, poor fund selection, and outrageous trading fees, why do so many people blindly compete everyday against a market index? As a manager of other peoples’ money, I am aware that I too am a victim of such thinking. Underperforming against the S&P500 TR is an anathema to me. Accordingly the past five years have been a very long stretch with considerable heartburn.  
 
Returns are Relative
 
After a recent board meeting at the Nintai Charitable Trust, I apologized to the Board of Directors for my record over the past few years. One of the Board members said, “Returns should always be taken in context. All I care about is that the fund can meet its current obligations and be ready for future ones. I don’t give a damn about the S&P500.”
 
I think this is an issue that is grossly undervalued in the investment world. The needs of the Nintai Charitable Trust are significantly different than a 72 widower surviving on investment income and social security payments. Trying to measure your performance against either an index (such as the S&P 500 TR) or a mixture of indices really isn’t an adequate measure of performance. Meeting my investors’ goals can sometimes be very different than how the targeted bogie does over a period of time. I want to be upfront that this is not an article condoning underperformance. As an investment manager myself, my animal spirits drive the competitive juices like most individuals. But what I am saying is that competitiveness in returns should sometimes be put in the proper context.
 
As an investor, I think there are three key questions that need to be asked as you create your portfolio.
 
Can You Live Your Goals As You Want?
It really doesn't matter what the markets are doing if your individual investment goals aren’t being met. For instance, a retiree may want to be in a 60% stock/40% bond portfolio and generate $36,000 in interest and dividend income from a $1.2M portfolio. If this individual cannot make her mortgage payment because she received on $29,000 in income, it really doesn't mean a helluva lot how her portfolio did versus the general markets. Conversely, a 35-year old attorney’s portfolio growth of capital will decide the status of his future retirement, so returns matter a great deal. He would be rightfully agitated if his portfolio returned substantially less than the market over a 10-year period. Comparing our retiree’s returns versus the S&P500 makes as much sense as comparing our attorney’s returns versus the Barclay’s US Aggregate Bond index.
 
Can You Sleep at Well at Night?
Nothing is more disheartening to investors than the permanent loss of capital. During market drawdowns, investors have a tendency to sell at exactly the wrong time. Those who make money in down times generally have several things in common, one of them being able to sleep well at night. If you aren’t comfortable travelling for 1 year with no internet access or means to check your portfolio, you aren’t invested in what you really need. Many people don’t need to listen to Jim Cramer every night and trade on a daily basis. A well thought out portfolio should give an investor confidence to focus on more important things in life. 
 
How Much Time Do You Spend on Your Portfolio?
As a professional money manager, I spent a great deal of time reading, learning, and understanding about new companies or industries. But I must admit I spend little time thinking about my current portfolio (with the exception of corporate filings and the competitive landscape). If I put a company in the portfolio, I should be comfortable with a 10 – 20 year holding period. For many successful investors, about an hour a year is adequate to rebalance a bucket of index funds. If individuals are spending 30 hours a week trading stocks, graphing butter production in Bangladesh[1], or sitting with bated breath for the aforementioned Mr. Cramer’s Lightening Round, it is likely you are spending way too much thinking about your portfolio.  
 
Conclusions
 
John Wooden once said, “Don't measure yourself by what you have accomplished, but by what you should have accomplished with your ability”.  Investing is no different. Many investors should measure performance by what they need, rather than what they want. All too often investors feel pressure to buy stocks in companies “guaranteed to triple in 6 weeks” or in funds that provide “4 times the Federal Reserve rate with !!NO!! risk!” While these are returns we would all surely want, it’s extremely unlikely that’s what we would get. As Mr. Thiel pointed out so wisely, sometimes the less we compete the more successful we are in thr long term.
 
As always I look forward to your thoughts and comments.
 
DISCLOSURE: I have no holdings in the stocks discussed in this article, and no plans to establish holdings in the next three days.

[1] This is an actual a tool used by individual investors who believe that taking the change in butter production in Bangladesh and multiplying it by two will give you the exact percentage by which the S&P 500 Index will change in the year ahead. Based on that, a 5% increase in butter production leads to a 10% hike in the S&P. The same statistics are believed to hold true on the downside. Really. For an illuminating look at this, see http://shookrun.com/documents/stupidmining.pdf