Letters to Our Clients
Investment results are easily measured on an absolute basis. Because they are so easily measured, academics, financial advisors, asset allocators, consultants, individuals and a host of others have devoted a lifetime to scrutinizing the results of others. They look to analysts, portfolio managers, the various public and private enterprises, and the markets in an attempt to find a person, some identifiable trait, or a methodology that can be replicated to produce superior returns. For many, the search continues, while others have ultimately decided that if this skill exists, it is not worth the effort to find it, and they just buy enough differing investments and hope to be in the right place at the right time.
Many times over the past twenty years we have discussed our mentors, those great investors who have influenced our thoughts, opinions, methods, techniques, stock selection and portfolio construction. We’ve shared the words and writings of Benjamin Graham, John Templeton, Marty Whitman, Bernard Baruch, Philip Fisher and so many others who deserve our thanks.
Some of us are bigger worriers than others. I worry over a very long list of things that mostly concern my son Carter. He currently has a lot of enthusiasm for cars. Sadly for me though, his most opportunistic hands-on car experiences involve parking lots. I worry a lot for Carter in parking lots, because of cars! I think most days his four-year-old enthusiasm is greater than my old dad chasing muscles. But I compensate for that worry with extra attention and that is the end of it.
When I first set up our business I stopped by the Army Surplus Store and purchased a used typewriter. My second stop was at an office supply store where I bought some index cards, pencils, pens, tablets, typing paper, and a few sheets of carbon paper. Last, I stopped by the phone company to set up my communication system. It consisted of two lines and a rotary phone with a button to switch between lines.
Twenty years ago I entered my first multi-day motorcycle endurance competition. It began and ended in Columbus Ohio. I had entered this event without any previous knowledge of what it would take to ride a motorcycle for five days in a row averaging a little over 1,000 miles per day. Looking back, I should have sought some advice from a few experienced endurance riders. Instead I just jumped on my trusty Kawasaki Concours with a stack of AAA road maps and headed to Ohio.
“Economic laws cannot be depended upon if we disregard psychology, etc.”
Alma Volker scribbled the note, quoted above, in the margin of a 1911 economics textbook, Outlines of Economics, written by Vassar College Professor Herbert Elmer Mills. Later her son, Paul Volker, who has served six presidents over his long career in public service, shared his regret of never discussing economics with his Mom in his recent book Keeping At It.
Kendall J. Anderson, CFA