Cart (0)
VIDEORandom Thoughts: Channeling Bennet Sedacca
Wisdom is a precious gift.
 |
|
Mistakes vs. Lessons
“When did Noah build the Ark? Before the rain”
- Robert Redford, Spy Game
One thing my dad often preached was his lifelong motto of “Plan for the Worst, Hope for the Best”. He took this motto intensely to heart when planning his investment strategy; that he was “risking” other people’s hard earned capital.
Buzz editor Matt Theal, who I have had the pleasure of working with this summer, asked me if I thought my dad would have been a bear? My quick response being “I think he woke up next to Boo every morning”.
The reality behind this statement to me was that he always kept his negative exposure to an extreme minimum at all times. He felt it was easier to win back 10% than it was 50%. The most important thing I took from this article, which Toddo touches on as well, is “Being cautious will only lose you opportunity - not capital.”
"The difference between realists and “perma-bears” is this: “Perma-bears” wake up praying for rain and don’t like to plan for tomorrow. Realists, on the other hand, look to get through the rainy days, and then pounce when the sun's about to peek out again."His thoughts in this article about the presidential cycles proved to be correct; albeit this cycle, unlike any other in the past 60 years, happened at an accelerated pace. This president infused a stimulus at the onset of his presidential term rather than the end of the 2nd presidential year, a trend that has been set in presidential terms since 1950 (as referenced in an article here and the Pepperdine study here).
His thoughts on the market collapsing turned out to be correct. At the writing of the article, the S&P was at 1245 and over the next eight months it saw a tumble to the lows of 666. We are still at war, and Bush's nightmare has now become Obama's.
While I don’t claim to have his knowledge about the markets, I hope I can give some insight into his musings and see how they have turned out years later.
“You’ll come to see that a man learns nothing from winning. The act of losing however can elicit great wisdom, not least of which is, how much more enjoyable it is to win. It’s inevitable to lose now and again. The trick is to not make a habit of it.”
- Albert Finney, A Good Year
Preach to Teach, ‘Cause Some They Never Had This
Something my dad often preached to me--and that I learned throughout school and research--was how people continually made the same mistakes in business and life. One thing that truly rang in my mind was how much history repeats itself. For me, his analogy was, “What’s the difference between monkeys and humans? We don’t make the same mistake twice”. In this article he showed charts over the past thirty years, detailing how every bubble followed the exact same trend, signifying how the markets continued to make the same mistakes again and again.
Both Todd and my father continually preached how the reaction to the news is more important than the news itself. I think what he touched on in this article about “V” bottoms correlating with fear and greed can be readily seen in the recent dip from 1120 to 1020 in the S&P, followed by its quick rise back to 1120. This rise shows the true temperature of the market following the technical trades around the perceived “Head and Shoulders”.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
