Stories, Sayings, opinions and rants prt 1

 Everything seems to go quite well for me until I need to rely on others.

To my then 4-year-old daughter, "Bella don't run on the wet, slippery surface,....Bella don't run on the wet slippery surface....dont run....slip, bang. wahhhh. then Bella stops running on the wet slippery surface. Very few people heed good advice (so why waste your breath), and few learn vicariously through others' mistakes. 

Almost no one wants to be told lies, but many do not want to hear the whole truth as well. what people really desire is an affirmation, "I agree with you" has to be among the most comforting words in our language.

Very few investors are good at every aspect of investing. in fact, my observations are that almost all investors, even the great ones, are very good at a narrow set of skills. The value added comes from exploiting that skill and not being distracted into putting capital and time into something they are no better than average (or worse). that is why I find it amusing when others ask the opinions of very good investors who are quite outside the great investor's wheelhouse. There must be some behavioural bias at play.

Many investors as well as myself, bemoan the risks and errors made by much of the investing public. the trouble is when you look to see who is on the other side of your trade, do you always want to see Buffet or Druckenmiller! Bring on the investing masses I say.

Luck deserves a whole paper discussing the ability to define and recognise it. As a US court said with pornography, we can't define it, but we know it when we see it!, the same can be said of luck. my favourite anecdote is 100 soldiers crossing a hidden minefield, half get blown to kingdom come, and half survive. Are the half that survives more skilful? if they repeat the process do the same half survive? another (not mine) a million apes bang away on pianos. sooner or later one belts out Beethoven's 9th. it is a fact, the accomplishment stands there without a doubt, but can it be repeated? differentiating skill from luck whether it be internally or externally is incredibly important.

For the vast majority of the time stocks are fairly priced, given risks, all the money is made in the other times.

Apparently, the average return for retail investors is about the inflation rate, that is, below the indices returns. however, they must be the ones not on social media, those guys have killed it :). The other aspect for retail punters (doesn't have to only be retail) is the lack of context on commentary. that is many are not being forthcoming with the whole story. a couple of examples, I made a killing on this, which may be true but no mention of the other moonshots that can to naught, their performance was huge (a big +%) but no disclosure that they refer to a trading high-risk portion that has done well in a strong market not disclosing the vast proportion of their wealth in some more traditional investment. etc etc. managing to get an apples-to-apples comparison is very tricky without this full picture. you can also add covering risk/style and luck etc etc. the moral of the story is to not let these stories influence your own process.

Many years ago I worked with a head of equities that was always talking about his gut. his gut was telling him this or that. After a couple of years, I suggested he change his diet. lol

One former colleague once told me that 15% of the population were sociopaths and 70% of them resided in law and finance. I can't vouch for the numbers or for the law (although I am inclined to agree), but it sounds about right for finance. Specifically,  Funds managers fall into defensive mode (when perceived threats emerge), as well as greedy mode very easily. Probably their biggest fear is the Emperor has no clothes story. If you could steal something with absolute certainty of not getting caught would that change your decision to steal or not. Morality coached in terms of not getting caught rather than being disgusted by the act (or instituting rules whereby it allows you to steal without getting sued). from Poor Charlie Almanac.--Incentive-caused bias plus social proof, if people are profiting in a social climate of doing wrong, then they will turn on you and become dangerous enemies if you try and blow the whistle. Powerful psychological forces are at work for evil

Success has many fathers, failure is an orphan. that quote is certainly true in the FM industry. One day many years ago a young guy from our marketing/sales department asked me what I thought about AMP stock. I asked for some context (always important). he told me that he had inherited a sizeable amount from his father, and since AMP had just listed was wondering what to do. I asked what he intended to do with the sales proceeds if he sold the shares. He said he was just married and that this was enough for a deposit on a house he had his eye on. AMP was trading low $20's at that stage. That changed everything for me. I said the future is uncertain but can only tell you what I would do in your place and that is sell the shares. Much time later I overheard him talking to some colleagues boasting about his well-timed sale. what occurred to me was, what if AMP had gone much higher instead?, would he still be happy with the call? would he blame me? I don't like giving advice because most people don't realise that the future is uncertain and there is a probability that things can work out very differently from what you imagined. you make your best assessment of the given facts at that time. whether AMP went up or down the prospect of securing a family home must weigh in that decision regardless. Of course, I thought AMP was overvalued but that is not the point it just helped. AMP now trades around $1, 25 years later.

those that fight hardest to clear their names are the ones with the most to clean.