A Lost Tale



When I was a little boy, I had a baseball glove that I loved.  It was my favorite and my one and only.  I would summarily dismiss the notion of playing with anything other than my prized possession.  I would take it out every day and work the pocket.  I would oil it and keep it safe from the elements.  One morning I went to my baseball bag, and the glove wasn’t there.  I quickly became frantic and started looking for it throughout the house.  It was nowhere.  I started to panic.  I asked my mom if she has seen it, then my brother.  I was out of luck.  I retraced my activities to the last time I absolutely knew I had the glove, which was in the final inning of the game the night before.  I walked back to the field, and still no glove.  I was desperate.  I went home and started calling my teammates to see if they picked it up by accident.  Still no luck.  Afterward, I called my coach and asked him if he could possibly get me the name of the coach of the team we played the night before so that I could show up at their next practice to see if one of them took it by accident.  I did this, and once again, I was out of luck.

I spent the next few days agonizing over only one thing, and everywhere I went, my eyes would gravitate to where I might find my glove.  At the next practice, I borrowed a glove from my buddy because if I went out to buy a new one, I’d feel I was mentally abandoning the search for my trusty companion.  I played shortstop at the time, and, at my first practice without my favorite glove, the first ground ball was soon coming my way.  To my surprise, I fielded it cleanly and made the throw to first base.  I repeated this over the course of practice and soon I was playing just as well with my borrowed glove as with my favorite, but still lost glove.

By now, many can relate to my obsession with my lost baseball glove.  After this incident, I resolved to behave differently the next time I lost an item, because even at a young age I understood that it was counterproductive.  The first step to curing my obsession was to look up the word “lost” in the dictionary.  In the dictionary it said that lost meant “no longer in your possession or control; unable to be found or recovered.”  It seemed like an adequate definition, but not for my purpose or cure.  It was imprecise.  I have always been fascinated by the concept of time, and in this case, it was no different.  I reasoned that “lost” had to have an element of time, otherwise in my case or the case of the obsessed, it could mean “still searching” or “not yet found.”  This state of “still searching” could last forever if left uncontrolled.  I developed a trick.  I decided that when I “lost” something, I would instead declare it “missing.”  I would give myself a timeframe, in my case, it is 15 minutes, to search for the object, and at the end of the period, I would officially declare it “lost” and no longer “missing.”  I would stop searching at the end of 15 minutes and take the necessary steps to live my life without this object.  If I found it later, then it became “found.”  It served my purpose and I liked my newfound independence from the tyranny of “lost.”

So how does this relate to investing?  It was especially relevant in the fall of 2008.  The only thing that people had on their minds was how much money they had “lost.”  The question then was the same as for my lost baseball glove.  How long would people dwell on searching for their “lost” money before they would take the necessary steps to live their life without this money?

Let’s backtrack for a moment and compare investing to fishing.  Using words again, let’s examine the word “fishing.”  There is a reason it’s not called “catching.”  If a person caught a fish every time they went fishing, it would be called “catching” instead.  Investing is the same way.  If you “made money” every time you “invested,” it would be called “making money.”  It’s not.  Just as the word fishing implies there will be periods during which you don’t catch fish, the word investing implies there will be periods during which you don’t make money.  This period of not making money is called “losing” money.  Like my baseball glove, you must recognize you have to limit the amount of time you dwell on your lost money.  Declare the money “missing” and then concentrate on your next move.  My Zen friends would call this “living in the present.”  To those who are still searching for their “missing” money, I suggest you declare it “lost” and focus on the future.  Focus on ways to take advantage of the next bull market.  Focus on your situation.  If you have lost more than you can recover, focus on how you are going to resolve the problem.  Focus on what you will do today.

Let me make one last point.  Focusing on today does not mean altering your investment philosophy.  It means executing it.  If you don’t have a philosophy that takes into consideration extreme periods, then you don’t have a philosophy that works.  I am not today, nor have I ever been, a proponent of the “philosophy of the day.”  When I read magazines or articles that say things like “three ways to make money today” or “How to cope in today’s environment,” I want to call the author and explain the grave injustice they are doing to their readers.  To be a successful investor you must take the bad with the good and develop an approach that works over multiple market environments.  Accept that fishing isn’t called “catching” and that investing has its dark moments.  How you react to these dark moments is what separates those with a plan or philosophy from those who will be forever “searching.”

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