You Only Get One Chance...Can't Go Back To The Well

My experience has been that you only get one chance with people when you ask for their help. There is a short window after the initial meeting where they are willing to help, but you can't keep going back to them asking for help. They turn off.

Inherent Conflict of Interest In Financial Services (and virtually any for profit endeavor)

Keep in mind that when you are dealing with a financial services firm you are dealing with a for profit entity. The goal of every for profit entity is to maximize its return to shareholders. Financial services firm’s balance their ability to take advantage of human nature (which they are very good at and have a lot of knowledge of) with seeking to maximize their own profits. There is an inherent, built-in conflict of interest. 

That is not to say that some financial services companies and financial services providers aren’t helpful or don’t really try to do the best for their clients, it is only to say that there is a temptation – usually embedded in the incentive structures – to lead with your own self interest vs the self interest of the client. 

Some Keynesianisms

Went to a presentation today on the life and philosophies of JM Keynes. Interesting fellow. I got the impression he was very independent and contrarian. I guess you have to be if you are going to reinvent the way we see something. In any case, he had a hybrid view on human nature. On the one hand he didn't think much about it (our instincts) and looked down upon the commoners. On the other hand he originated a great insight to human confidence and the need to keep it up, and how devastating it was when it eroded. I think he saw confidence as a facade, but a very important one to maintain.

He made his name with the incredibly insightful "The Economic Consequences of Peace," in in which he foresaw the negative implications of the Treaty of Versaille.

He hung with The Apostles at Cambridge and the Bloomsbury group in London.

After cavorting around as a gay man, he became smitten with and married a Russian ballerina.

There Is No Single Best Solution, But...

There is no single best investment strategy, approach, philosophy, solution. There is no unified theory of investment management.

For long term investing, there are however a few simple things you can do to increase the chance of positive outcomes.

Get on the right side of secular trends, ie. exposure to growth, increasing productivity, rising earnings/free cash flows. One important factor is the valuation level you enter at. Secondary factors are short-medium term momentum and longer term mean reversion facilitations.

Have a underlying philosophy that takes out some of the more common errors or mistakes, ie. thinking you can consistently time the market, choose the best manager, or make the right stock picks. Passive, low cost, equal weighted exposure to global growth factors.

Have the humility to realize that you don't know it all and that you won't always get it right, therefore have a disciplined downside risk management framework that either includes strict stop loss limits and/or non-correlated asymmetric downside protection.

Patience - One Of The Greatest Investment Skills

There are many skills an investor must have in order to be(come) a great investor. One of the greatest, and perhaps least appreciated, is the skill of patience. The ability to wait.

The structure of the markets and the nature of the investment management industry, in conjunction with our human essence, are predisposed against it.

The less I see of it in my own investment persona and its effects, the more I appreciate the value of patience.

I think the key with patience (and where its value lies) is that it allows you to pick your spot(s). To operate on your terms, when the conditions are most advantageous to you.