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Monthly Archives: December 2012

A friend recently shared what he called “the most bad ass obituary ever” and I have to agree.  Over the summer a Frenchman named Robert de La Rochefoucauld died at the ripe old age of 88.  Here are some highlights but I encourage you to read the full story over at the NYT.

Highlights:

  • Belonged to one of the oldest families of French nobility
  • Was mayor of a small town in France for 30 years and had the title of “count”
  • At age 15, while a student in Austria, recieved a pat on the cheek from Hitler
  • Fought with the Allies and La Résistance in WWII as a British spy
  • Escaped France in 1942 with two downed British airmen after Hitler invaded France and the Nazis took his father hostage
  • The British rescued Count Robert and the two airmen and brought them back to England.
  • The Brits were so impressed with The Count’s boldness and ingenuity that they asked him to join Churchill’s clandestine Special Operations Executive (S.O.E).  He did.
  • The Count proved to be a valuable asset to the Brits.  Apparently “the courage and skill of the British agents is without equal.  It is just that their French accents are appalling”
  • The British trained him to jump out of airplanes, set off explosives, and kill a man quickly using only his hands
  • The British parachuted him into France in 1943.  There, he destroyed an electric substation and blew up railroad tracks but was captured and condemned to death by the Nazis
  • While being taken for execution he jumped from the truck he was on, dodged bullets, ran through the streets only to end up right outside a German headquarters.  There he spotted a limousine with swastikas on it, the driver nearby, and the keys in the ignition.  He stole the car and ended up catching a train to Paris, hiding in one of its bathrooms
  • The S.O.E evacuated him to England via submarine but by May 1944 Count Robert parachuted back into France
  • Dressed as a workman he smuggled explosive into a huge German munitions plant, hiding them in hollowed out loaves of bread.  He blew up the plant and fled on a bicycle only to be caught by the Nazis again
  • In his cell he faked a seizure and killed the guard who came in to check on him.  He took the guard’s uniform and pistol, shot two other guards, and escaped
  • Desperate to avoid recapture he dressed up like a nun and sought shelter with the French underground
  • After the war the S.O.E was disbanded, Count Robert was knighted in the French Legion of Honor, received France’s Medal of Resistance, and he was decorated for Bravery by the British

Talk about a life well lived.

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Research In Motion, maker of the BlackBerry or the company Steve Jobs killed.

If RIM had a body, Apple could have it stuffed, mounted, and displayed in their corporate HQ – I guess they’ll just have to settle for RIM’s articles of incorporation?  That’s not much of a trophy.  In any event, there are people who speculate that RIM could turn things around; however the majority of people view it as a take over target for the intellectual property.  They are trading at $11.90 with $5/share of cash on their books.  Do you feel…. lucky?

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Science of hitting

One of the most fundamental rules of investing is “to wait for the fat pitch”.  That is, wait for an opportunity to hit the ball out of the park.  Simple enough right?  Not really – most investors find it hard to do nothing, even when there really aren’t that many good investment opportunities.  Professional investors find it especially difficult to “do nothing” because they believe they’re being paid to do something.  Well, in the world of investing, doing nothing is in fact doing something and professional investors don’t get paid for activity, they get paid to be right.  If the right thing to do is not swing at the pitch then don’t swing at it.  Your client is not going to care how “active you were” if you lost half their money.

Warren Buffet famously quips that he only really needs one good idea a year.  Jim Rogers, another famous investor, says “don’t invest until you see the money lying there on the floor”.  “Wait for the fat pitch” is in fact one of Jeremy Grantham’s core tenants of investing.

It’s sounds easy but it’s not.  Humans are hard-wired to act – especially when they see other people getting rich making “easy money” in the stock market.  It’s at this point that you have the strongest emotional urge to act – resist!  For it is also at this point that the risk of losing money has increased.

This is the closest finance comes to having “a law of gravity” – the more expensive an investment becomes, the less return it can provide.  If you see other people have gotten rich from it, it’s probably too late for you.  While there are always exceptions, a good rule of thumb to keep in mind is “be fearful when others are greedy and greedy when others are fearful”.

In baseball you only get three strikes.  In investing you can take as many “strikes” as you need until you see the fat pitch.

Not surprisingly Warren Buffet sums it up best (excerpt from his 1997 Berkshire Hathaway Chairman’s Letter):

In his book The Science of Hitting, Ted [Williams] explains that he carved the strike zone into 77 cells, each the size of a baseball. Swinging only at balls in his “best” cell, he knew, would allow him to bat .400; reaching for balls in his “worst” spot, the low outside corner of the strike zone, would reduce him to .230. In other words, waiting for the fat pitch would mean a trip to the Hall of Fame; swinging indiscriminately would mean a ticket to the minors.

       If they are in the strike zone at all, the business “pitches” we now see are just catching the lower outside corner. If we swing, we will be locked into low returns. But if we let all of today’s balls go by, there can be no assurance that the next ones we see will be more to our liking. Perhaps the attractive prices of the past were the aberrations, not the full prices of today. Unlike Ted, we can’t be called out if we resist three pitches that are barely in the strike zone; nevertheless, just standing there, day after day, with my bat on my shoulder is not my idea of fun”