“True heroism is remarkably sober, very undramatic. It is not the urge to surpass all others at whatever cost, but the urge to serve others at whatever cost.”– Arthur Ashe
When most kids are young, they probably imagine themselves in a profession which draws plenty of attention. These days, as has been the case for many years, the majority of the publicity for work is drawn to athletes, musicians, actors, and if ever there was a group which clearly deserved no attention, our hard working politicians. In any event, with two once in a century storms striking Texas and Florida in the brief time span of two weeks (and maybe one more right behind them), there are plenty of people who are looking at an extended period of real difficulty. In these tough circumstances, the genuine heroes emerge with their hard work, compassion, and meaningful contributions helping society rebuild. They are our parents, teachers, nurses, librarians, doctors, lawyers, accountants, engineers, construction workers, police officers, fire fighters, sanitation ‘consultants’,and of course, the public service employees in the multiple areas of government (city, state, federal). There is no television interview, cheering fans, red carpet treatment, or glamour anywhere to be found in these roles. However, as one matures and evolves, you come to recognize what is important and substantive, and conversely, what is shallow and meaningless.
In the investment world, the glamour usually goes to the star hedge fund or mutual fund manager who is shooting the lights out with great performance during the last six months or year. Meanwhile, all across the professional, there are unsung advisers and planners who find out about the goals and dreams of their clients and work hard to make them happen in a responsible way. It involves plenty of reading, analysis, and psychological strength, especially when markets, portfolios, or positions take a tumble. Over the years, quietly beating the market by one, two, or three percent (maybe more) can add up to an incredible amount of extra money for those fortunate to have capital placed with these excellent professionals. Like their fellow contributors in many unsung roles, yes, the humble financial person is also a hero.
In this light, I might add one of the most important skills an investor can learn, which many advisors excel at, is learning not to panic when things go against you. Yes, finding a good company at a fair price is critical in equity investing, but so is holding good companies when they may falter and not cutting them loose if they have a bad quarter. Often times, the best investment you can make is to reinvest capital into an existing position you are familiar with when it struggles, which happens to nearly every business. As an example, a few years ago a powerhouse holding had results which were OK, but the industry was in a poor place and the position sold off a little bit. A few years later, it has recovered nicely, and adding to it has worked out well (so far). A different course of action, like selling and taking a loss, would leave you with a completely different result. Again, no glamour involved, just making good decisions, which is really what investing is based on.
In the markets this week, on the macro economic front, Mario Draghi left its economic stimulus program unchanged but indicated that in October, it will cut back its bond buying binge. You might have noticed the lingering weakness in our dollar, especially against the now strong euro. If you haven’t, fear not, you will hear about it more during earnings season, which will be upon us in a month or so. On the corporate front, a few final reports trickled in from computer giant HP (NYSE:HPQ) (not bad), and supermarket behemoth Kroger (NYSE:KR), which was fine until they withdrew guidance for next year because of emerging competition. I wonder what company that could be? Whole Paycheck maybe (not now, that’s for sure)? Restoration Hardware (NYSE:RH), long under attack by the shorts because of an aggressive buyback, blew out numbers and drew blood. Shorting works, until it doesn’t, so don’t think that is always the answer either. In the small cap world, DavidsTea (NASDAQ:DTEA) and Zumiez (NASDAQ:ZUMZ) also showed nice results so maybe retail is looking a bit better.
Finally, in the shallow world of politics, it turns out our savior in dealing with the nut-ball from North Korea might be none other than our countries own nut job. No, it is not Donald, who has certainly imprinted our Presidential office with his own distinct seal. Our definition of crazy diplomat would be the tattooed one, the honorary Dennis Rodman, who offered his services in guiding the North Korean wacko down from the nuclear brink. In thinking about it, Donald could send the threesome of those he fired, Rodman, Mooch, and James Comey as a team to deal with North Korea. It certainly would get plenty of attention, which is what the trio specialized in, naturally. Of course, none of these people are genuine heroes, as you know who that distinction is reserved for. T
Disclosure: Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charter holder.