It occurred to me that in our field of performance measurement, unlike other disciplines, it is quite common for folks to make statements, as if they're facts, without any supporting research to back them up. And so, what this amounts to is just opinions, which may or may not hold any truth. The speaker or writer should therefore qualify their statements with something like "in my opinion" or "it's my belief," so as not to mislead the listeners/readers. Don't get me wrong: I have no problem with people having opinions. Heck, I've even been known to have them once in a while. But we must distinguish between opinions and fact; conjecture and something that's been proven.
Take transaction- versus holdings-based attribution. Until the research I began a year ago, I'm unaware of any objective analysis that had been done to justify the claim that one method is superior to the other. (By the way, I will provide additional insights on my research at this year's PMAR conferences).
Someone recently sent me an email that included the following statement:
"You often criticize without substance behind your arguments and
without offering and constructive alternatives."
I must confess that I was neither offended nor upset by this statement; rather, I was perplexed, surprised, and a bit befuddled. The statement is both ironic and invalid. First, the irony is that the fellow who sent it made a claim himself without a single example to back it up! Second, I can cite numerous examples to the contrary. A couple recent ones: (1) in my criticism of the aggregate method, I went to great length to provide several examples of how it fails to provide a valid return, pointed out that it conflicts with the definition of "composite return," and offered preferred methods; (2) in the case of my objection to asset-weighted returns, I provided examples and the clear benefit for equal weighting.
Nevertheless, the statement raises a point that all of us who make claims or voice strong views should be mindful of: the need for objective analysis and a recommended alternative.
Can you imagine a mathematician stating that "there are an infinite number of double prime numbers" without offering a proof? If they state "I believe" in front of their claim, that's fine, but to make the statement as if it's fact would be laughable.
Introducing some discipline into our field would, I believe, be an improvement. Back to Kahneman's book, he's motivated me to begin some new research, which I hope to do shortly.