Thinking in the time of CORONA: Be careful what you wish for
‘Be careful what you wish for, lest it come true!’
The origin of this saying is Aesop’s Fables, the world’s best known collection of morality tales (circa 260 BC).
Most of us can relate to the charming dreams of many young girls, and some young boys, who dreamt of becoming Miss Universe. While the noble motives to help feed the poor children and work towards world peace would have been admirable and oulik, it is very unlikely that reality would have accurately reflected the dream. (I think we’ve all seen enough of those pageant parents to shatter any lingering wistfulness.) And those wishes for longer weekends, time to learn the guitar, less time in traffic…en kyk hoe lyk ons nou!!
It would be reasonable to assume that the dream of any business development/marketing person in the asset management space would be to hold the Number One position across all periods in their category. Hence the title of this article…and while we’d rather be where we are than anywhere else, one is mindful of the devastation and despair that surrounds us currently. While we don’t have an office war-cry bellowing that we’re No. 1, we do have refrains relating to transparency, simplicity and consistency; our positioning will certainly change, the latter will not. We are also aware of the impact of the ‘easy come, easy go’ mentality of some investors – the constant search for the Holy Grail that motivates them to follow the red dot sans much understanding of the underlying philosophy.
In my early days with Gryphon, we ran a social media campaign which was a series of photographs of the team with quotes from each of them. My quotation at that time was, ‘I believe that Gryphon is about to become the overnight success it takes 20 years to earn.’ So, the fact that Gryphon has firmly established itself as a credible diversification option does not surprise me in the least…and it does give us a firm base from which to engage.
Current events, though, have created the opportunity to reflect on how we got to be here as well as some of the wisdom we’ve gleaned as a result. We’ve written a number of articles explaining and sharing the investment perspectives, but I thought I’d shift the perspective a little…share some thoughts.
Some of those thoughts:
1. Because something is simple that does not mean it’s easy: if something is simple, it’s clear and logical…it doesn’t mean it’s easy to do or to implement. If you take riding a bicycle, the concept is simple; get on the bicycle, pedal, don’t fall off. For a beginner, easier said than done. The same with learning the guitar: get the guitar, learn the chords, get leather pants and take it on the road. Having a set of guide lines to follow sounds really simple and it’s reasonable to assume that that means it’s easy to be done. But having the courage, fortitude and single-mindedness to remain focussed and unaffected by external noise, expectation and resist the temptation of bright shiny things, is a lot more challenging than it appears – whether managing investments or learning to ride a bicycle/play guitar. And it’s only if you are able to stick to it that you can eventually stand back and reflect on the degree of success…and then of course, what is the benchmark of success…but we’ll save that one for another day…
We have already written an investment-related article, but I’ve included this concept here to raise awareness of the reluctance and resistance by investors to consider the integrity of what is simple, and then to allow the implementation to be done by the experts. (The article can be found here: Simple, but not easy.)
2. Skill versus luck – it is reasonable to allow that success is a combination of skill and luck. In rules-based investing we rely more heavily on the skill side and are grateful for the generosity of luck. I defer to the wisdom of someone far more erudite than I for additional insights. Michael Mauboussin said, “There's a quick and easy way to test whether an activity involves skill, whether you can lose on purpose.” He goes on to say:
Skill is the ability to fire knowledge readily in performance and execution. We know how to do something, and when the moment comes, we can do it.
Luck has three specific features — it works for an individual and/or organization, it can be good or bad, and it's reasonable to expect something else could have happened.