The process of nomination consists of two steps. In the first step, we ask our readers to nominate the candidates. Then we will set up a poll for users to vote for the investment Guru of the Year. It is a completely democratic process in which GuruFocus editors do not have control over the outcome.
Our records of nomination have been mixed. We have seen twice that our readers nominated a Guru of the Year at the peak of their Gurus’ fame, just to see their performance dither afterwards. For instance, Ken Heebner was voted the Investment Guru of the Year 2007 after his fund gained 80%. Then he gave back all of his gains and some more in 2008. Bruce Berkowitz was named Investment Guru of the Year for 2009. He continued to do well in 2010. But 2011 has been a disastrous year for him. He has since lost more than half of his fund assets to poor performances and redemptions.
We are lucky that we did not nominate John Paulson for 2010. His loss of 45% so far in 2011 has been reported everywhere in the media.
Does it mean that our readers made bad choices and Ken Heebner and Bruce Berkowitz are not good investors at all? We don’t think so. These two investors are still at the very top among all fund managers if you look at the performances of the past 10 years. We just give up completely on a good investor just because he had a bad year. Even Charlie Munger had two consecutive years of losing 31% in 1973 and in 1974. The combined loss was more than 50% for the two years.
The stock market has been tough for many investors this year, although the market itself is almost flat. More than 75% of fund managers have lost money this year, according to Barron’s. But we have seen many investors continue to do well. For instance, David Einhorn made a fortune (and fame) with his short position of Green Mountain Coffee (GMCR). Concentrated in high-quality large caps such as PepsiCo (PEP) and Cisco (CSCO), Don Yacktman’s funds continue to outperform. Our permanent Gurus Warren Buffett and Prem Watsa poured money into banks while it seems that no one wants them.
Please nominate your Investment Guru of the Year 2011 below.