THE COMPETITIVE ME AND PRUDENT ME ARE AT WAR TONIGHT
As I grow older (now sitting at the ripe, old age of 36) I have found that there are two predominant truisms that exist in my life. I am growing more and more regimented by the hour. I can tell you right now what I will be doing on Sunday at 3pm. I have essentially lost all sense of spontaneity and excitement that marked much of my life up to several years ago. At this point in time, however, this is exactly who I am supposed to be. I'm not sure if this will lead to me spinning out at the age of 65 and becoming an old womanizing drunkard. I suppose I will deal with it appropriately if that should be the case. Perhaps it won't need to be dealt with at all.
I have also gone even deeper into my fascination with statistics. I've always loved tracking numbers. You cannot dislike numbers if you want to be in this profession. You will sit for hours each day watching them flash red and green. Then when the market closes, you will see more of them in the form of data regarding companies. Your life becomes one prolonged statistical soap opera.
My performance is one thing I watch closely. I was putting together my numbers for the year tonight and was disappointed with the +13% number that has marked my year thus far. It is a little more than 100 basis points better than the S&P. Years ago, however, I would be up some 20 plus percent in an environment similar to this one.
The one primary difference is the fact that I no longer use leverage. That accounts for the difference. It also accounts for the fact that I will be around 12 years from now. I won't blow up a hedge fund that was on its way towards gathering enough assets and putting together performance that would have allowed me to live in a diamond encrusted cave, surrounded by giant monitors constantly streaming news in 14 different languages, all of which I could understand because I would be willing to throw money away on endless Rosetta Stone lessons.
I also have the means of counteracting myself. I didn't have that before. By counteracting myself, I mean that I have mechanical systems that take me out of the game when the market begins to skid. It is a three step process that I may discuss one day. But it allocates into cash and hedges automatically when A+B=C. I don't override it. I just listen like a robot. That is another means I have implemented to add longevity and insure that I don't experience a blowout ever again.
These systems, methods and levels of understanding are the result of two things: Humility and Experience. I give all the credit in the world to the guys who start in their 20's and are able to pull off a steady ride all the way into their 40's, managing billions of dollars and creating generational wealth that will insure their children are completely dysfunctional and reckless. It takes a fantastic mindset and extraordinary maturity to be able to start at such a young age and consistently perform in this arena. In my book, you have passed the cool test and the smart test if you are in the extreme minority that has accomplished such a feat.
Tomorrow I will wake up and make sure everything is in place so I can play another day. While my competitive side says that 13% on the upside is too little this year, my prudent side says it is just enough. The stage is yours prudent side...run with it.
