Moments of Silence
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.