October 27, 2015 § Leave a comment
Many of you ask…
What do you do in these long moments of silence, Tim? The answer is I wait. I uncoil myself, stretch out into deep evenings of solitude and wait.
One of my favourite pastimes is to study the old masters. No, I don’t mean Rembrandt or Caravaggio. I’m talking Seth Klarman and Paul Tudor Jones. Klarman’s superb. Really superb. A genius trader who doesn’t shy away from indulging his genius. But he doesn’t need not to. His success speaks for itself. A thirty-year stretch of home runs that would make Babe Ruth quail.
I managed to get my hands on his book “Margin of Safety” published in 1991. If you haven’t read it do so. It’ll give you a new perspective on things. I now see intrinsic value in everything. I see food as calories. I see paintings as auction value. I see night as the absence of light.
Sadly I was forced to pay $15,000 for the book to an old lady from Nebraska. It took seven hours of hard, hard negotiation to get her down to that price. In the end I felt jaded. Still, I now own the book. Here’s a nugget.
“Investors will frequently not know why security prices fluctuate.”
How very true! Frequently doesn’t quite cover it.
There are, of course, certain things that even the great man gets wrong.
“Investment success cannot be captured in a mathematical equation or a computer program.”
I wonder if he’s heard of Jim Simons? Or the Medallion Fund? Or Steve Cohen?
My other pastime of late is to watch the 1987 Tudor Jones’s famous film “Trader”. If you haven’t seen it do so. It’s not that he calls Bruce Willis “a stud” while wearing his trainers that he bought at auction which he says are responsible for a 30 point pop in the stock market every time he puts them on. Or that he spends most of the film biting his nails and at one point actually breaks down in tears when he loses $5 million in a day (it was 1987, it’s understandable). It’s his incessant drive. His singularity of purpose. Whether it’s on the 1980s style exercise-bike-cum-rowing-machine, the red braces and oversized glasses, the Quotron trading machine or breaking down a multi-million dollar currency trade from his home phone while chomping on pizza, it’s all done with a maniacal, mouth-foaming intensity that we, of a lesser persuasion, can only watch and admire.
Of course you’ll be quite lucky to get hold of the film—he bought up and destroyed most of them soon after release. I had to purchase an old copy on VHS tape which cost me $12,000 from an old lady in Nebraska. Yes, it was the same one. This time she really took me to the cleaners—16 hours of incessant, turgid negotiations. At one point I spent a continuous stretch of 3 hours on the other end of a deathly silent phone after she fell asleep without telling me. That I had to shell out a further £212 for a VHS player only added to my invidious distress.
This Lady of Dark is called Miss Dorothy L Dickstein—if you ever come across this old crone, beware. She is the devil.
Anyway, as Klarman says, always have a margin of safety. Despite the pain I’ve been through I now hold two assets whose value will grow over time. Her’s is perishable.
October 8, 2015 § Leave a comment
There is a famous saying-
Sotheby’s will launder your sins for you.
Just today I was strolling round one of the London galleries glancing at the various pieces on show, distracted, rejected, ejected by the atropaic green dot—that is the green dot saying “sold.”
As my own eye shifted warily from piece to piece, I was struck with one thing. How ludicrously expensive it all was. Something’s wrong when you’re paying £1 million for a Taylor Shinbone eggbox.
But it had all been bought by fellow hedge funders.
Waking out of the gallery on this cold and frosty Autumn afternoon, my main take away from the experience is that art continues to increase in price even as the rest of the market shuffles towards the abyss. Why?
It is impossible for a canvas brushed with paint, a marble statue with no arms or a steel and metal monolith with upraised girders in the shape of tubes and a mesh world signifying banker’s excess, to have an intrinsic value of a hundred million dollars. These are not tangible assets like those of a company, say, for example, VW.
For hedge funders, the value of art it isn’t governed by tangible assets. But by jealousy and desire.
Art is an object that provides social currency today. It knits together a select group of global nabobs and those who want to be seen sharing economic and cultural rank with them. They gain from it a thin veneer of respectability that they plaster all over their faces like stage make up.
Look at the Qataris. Who took them seriously until they bought that Cezanne? I knew they had money, but did I know they were going to use it like that? Fuck.
This currency of art gives you access to the dominant economy. It’s a symbol of your membership of a global class of the world’s elite. In the cold nuclear freeze of economic crisis, it is far less important that it can be bought or sold but that you have it. People will follow you, regardless. For the man with the last Leonardo is vinci. In the land of the blind, the trompe l’oeil is king.
Anyway read the next excursion of “Anatomy” here.