Annual Compound Growth Rate Over a Long Time
It's best to check the return history of the investor - over a long period of time that includes at least two cycles of the stock market If the annual compound rate could beat the market considerably during such a long time period, then we have a truly successful investor!
Stable Returns Over a Long Time
The second metric to evaluate an investor is to see if the investor could keep stable returns over a long time. If an investor lost to the market consistently over many years, then had a huge successful year that led to a good annual compound growth rate, obviously the investor still couldn't be called a successful investor.
Maximum Draw Down Over a Long Time
The third metric to evaluate an investor is to observe the maximum draw down the investor experiences during the stock market cycle, especially during the worst time. Stock market often has the black swans, when it happens, it is a great time to test the investor's risk control ability, which is a must have for any successful investor.
It's extremely hard to become a successful investor. For most ordinary investors, there is a practical way to be successful in the long term, we will discuss in the next blog post.