Friday, March 27, 2015

The Last Thing I Would Want to Do

Best case scenario is when you can find something you want to do. But you can learn a lot by simply ruling out things you do not want to do as well.

This week's WSJ reported on money managers who spend a tremendous amount of time worrying about the market hour by hour.

"Most mornings at 5:45, David Kotok hops on his exercise bike, straps a small miner’s lamp to his forehead to read in the twilight and begins scouring research reports for signs the stock market could crumble.

The Florida money manager, who is 72 years old, is bullish, but things can change suddenly. This month, he moved heavily to cash amid signs of trouble, but soon returned to stocks. So he pedals onward, reading reports and shifting two smartphones and a sheaf of papers to avoid drops of sweat.

In Minneapolis, Doug Ramsey ’s daily ritual involves tracking 130 indicators on subjects from corporate performance to investor mood. He isn’t as bullish and has reduced his stockholdings.

“I think about it hourly. It really keeps me up,” said Mr. Ramsey, chief investment officer at Leuthold Group, which oversees $1.6 billion."

Ok first off, I am sure that they are smart and have lots of money, but what a way to spend a life - predicting markets? Darting in and out based on 130 different indicators? 

I find Tom Gayner's "nobody knows nothing" and Howard Marks' "you can't predict but you can prepare" approaches both more successful and a far better quality of life.

As opposed to worrying about the hourly movements of 130 different indicators, instead of that what about Charlie Munger - "I succeeded because I have a long attention span." 

Beyond quality of life, I think it pays dividends towards long run returns to approach things that way. Investing skills can increase with age. Buffett's Heinz deal appears to have been one of his best, and that is saying something - Get paid 9% dividend for two years during which time you triple your money on a low risk investment.

Hard to top that. Not everyone is Buffett you say, not everyone can partner with 3G. All true. But even outside, individual Kraft investors have doubled their money, got paid a healthy 4ish% dividend, and now are part owners in a business that includes Heinz and is run by one of the best operators on the planet. 

By contrast of the 130 hourly indicators, here is the grand total of all time I spent worrying about Ketchup and Mac and Cheese consumption, wait I will round it down to the nearest whole number - zero!

On the plus side, the WSJ piece produced a modern day rarity - smart comments on an online  newspaper article.

Paul Wm Danielsen 2 days ago
Big Index Funds
Call me when I'm 70
( a miner's helmet light. Really ?!? )

Karen ThomasKaren Thomas 3 days ago
I've long believed one must view the circus from the outside and then make  decisions. In other words, watch the clowns to determine what to do.  There is much to learn from watching the show. It's insightful  to read the machinations of such managers.

Much in our culture (and others)  promotes short-term thinking. Perhaps our perceived enhanced degree of impatience and the promise for quick rewards is a by-product of technology and of course other things.  However, this mind-set has long been a part of societies. The media and it's advertisers (which is the media) pushes much of this. The cynic could say we are awash with snake oil sales people and their "idea of the day". These same people usually always have a vested interest in these ideas. Don't take them too seriously because they will have a new idea tomorrow along with another bottle of oil. There's a reason snake oil stands are in close proximity to a circus.

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