A recent discussion led me to remember a WSJ article I read a few months ago on Bill Miller’s incredible trackrecord of beating the S&P 500 for 15 consecutive years. The author of the article pointed out the following:
"Mr. Miller's long spell of winning years was to some degree a quirk of calendars. Over the course of his streak, there were plenty of 12-month periods ending in a month other than December when the fund trailed its benchmark."
Performance and trackrecord is usually judged on an annual calendar year basis. Convention dictates that the annual return period fall between January 1st and December 31st. There is no particular reason behind this convention. Ironically, most of the large university endowments, such as Yale and Harvard, have return periods that end in June each year.
Whether you like it or not, for investors currently managing capital (especially those hoping to woo additional capital), there are definitely rules to this game. Hopefully keeping in mind the rules makes the game easier to play.