|The bull and its blood symbolize a call to nature at its most brutal, pure and irrational. -Jose Antonio del Moral|
If you are not a fan of bullfighting please move along. My interest in defending this sport is exactly zero.
There is a documentary about bullfighting, The Matador, by Seavey and Higgins, that follows a very young (and now very famous) Spanish bullfighter, David Fandila, over a three-year period as he struggled to complete 100 corridas in a single season. A cursory glance at the reviews found the film to have been well received when it premiered in 2008, and this in spite of the subject. While I found the story of “El Fandi” more engaging than the story-telling, it certainly offered up some great bullfighting video and even better quotes; from Jose Antonio del Moral, “The bull and its blood symbolizes a call to nature at its most brutal, pure and irrational.”
Many casual comments become quite compelling when scrutinized, including agreement from El Fandi, that he is not an artistic bullfighter. This observation is not without merit, since a comparison to, for example, Enrique Ponce provides a clear contrast in styles. Ponce performs with an elegance of posture and movement that even a first-time viewer would likely define as classical. Whereas El Fandi demonstrates a theatrical, often coarse flair more akin to an entertainer. This difference in approach is not just about technique. It is about the purpose of the spectacle found only in a corrida.
El Fandi states unambiguously his desire to deliver a memorable performance, to “bring the audience to ecstasy.” Being a great bullfighter in the traditional sense appears less interesting than being an inspiring entertainer. del Moral offers another observation to this point, “…but it is a beautiful savagery with an artistic payoff.” By comparison, he refers to ballet, where the movement of the human body is regarded as artistic expression. Yet for El Fandi, it is the elegance displayed in the face of death that defines the artist. While a whiff of fear will destroy an otherwise masterful performance, El Fandi chooses to exaggerate his bravado, delivering a show that forcefully reminds the viewer of the high stakes being wagered with each corrida. His technique is less about the form (classical) than in the delivery (entertaining).
It is also worth noting that the documentary does an excellent job of reminding the viewer that the bulls can give as good as they get. The remarkable scene of El Fandi being gored, immediately undergoing surgery, then returning to the ring forty-five minutes later to continue fighting is unsettling to the extreme. And a vivid reminder of what separates the truly great from the rest of us mere mortals.
Finally, it is worth knowing that a bull only fights once, if it survives it is put to pasture. Speaking about the bulls that survive the corrida, a young David Fandila talks about the “inner calm” he senses when in the presence of these winning champions. Interesting observation from a guy whose death in the ring is the only way for a bull to enjoy an “inner calm.”
|“Avoid the unforced error, nail the basics and don’t take outsized risks” might be the best advice the individual investor can follow.|
An often-underestimated influence on equity and bond markets is the heavy hand of luck. Frankly, you can do everything “right” and still get bad results. And since luck can’t be controlled, knowing how to react – whether that luck initially appears to be good or bad – can separate winners from losers. But just because something can’t be controlled doesn’t mean it can’t be managed.
We all know bad things happen that are beyond our control to foresee or influence. Fires, floods and financial crisis come to mind. So we buy insurance, avoiding home purchases in areas prone to flooding and create investment portfolios that are well diversified with a healthy dose of cash savings. But what else?
One of the best thinkers on this subject, and a terrific writer to boot, is Michael Mauboussin. The man knows how to think about how we think – especially as it relates to investing. I read his terrific 2012 book, The Success Equation, when it first came out. Subsequently, the opportunity to hear him talk about his book in person helped to clarify some of his more nuanced arguments and observations.
One of the many surprises that will be found in The Success Equation is an important reason why individual investors should look to exchange-traded funds as their best bet to achieving financial goals when using the stock markets. Discussed in many posts here at Invest-Notes, by choosing to invest in indexed funds smaller investors earn the market averages over time with much less risk or cost than owning individual stocks or traditional mutual funds. Remember, for as long as equity markets have been measured, they have gone up more often than they go down.
Let the Big Dogs Bark at Each Other Instead of You
As noted recently in The Economist, 70% of U.S. stock markets are now owned by large institutions like Blackrock, Vanguard, Fidelity, pension funds and hedge funds. That percentage was just 35% in the 1980s. This means the self-described investment professionals are competing against each other more fiercely than ever before. As Mauboussin intriguingly suggests, the more skill involved in a competition the bigger the impact of luck on the outcome.
As a reality check, the following is from the prospectus of an initial stock offering (IPO) for a high-tech company that went public in March of 2017. Hyped by many, including the original investors then in a position to sell their much-appreciated shares, this quote sounds like a fair warning in my books, “We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability.” But if this is such a great investment, why would the private owners want to sell their stock in the company? If you had purchased shares at the IPO, you paid the original investors around $26 per share. Your investment is now worth about $13. So, as two of the biggest money-losing companies on the planet begin selling shares, no names but they provide ride-sharing services, best to avoid this ride.
By being honest and observant about the outcomes of our investment strategies – repeatedly and over time – we can create mental models that help anticipate the unexpected (to minimize risk) while expanding opportunities (to maximize upside). You can easily improve your overall return just by minimizing costs like fees and commissions (nail the basics). You can stay calm and remain inactive during times of great stress (avoid unforced errors). You do not have to go head-to-head with the pros (no outsized wager on a hot stock tip).
As Rudyard Kipling noted a century ago, just ”…keep your head when all about you are losing theirs…”
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