March – it’s when the madness begins. There’s an anxious anticipation in the air of what’s about to unfold in the months ahead. There’s a gleeful giddiness that you just can’t ignore. And that wild and wide eyed look? I see it in my mom’s eyes each March. She makes US college basketball fans look sedate. Yes I’m talking about gardeners, that nutty joyful bunch who each spring jump with delight when they see the beginning blooms of the bulbs planted last fall.
The apple fell pretty far from the tree when it comes to gardening, green thumb I am not. But I like to think that investing for the long term is a lot like gardening. We plant our investments months, even years in advance expecting that come spring the bulb grows up to be that rich ruby red tulip advertised on the packaging. There’s the daily tending to the garden, making sure the soil is replenished and the plants are watered. Also, the pulling out of the inevitable weeds that mange to creep in (hey, no one’s perfect and when it comes to investing you just want more right calls than wrong ones) and if you’ve followed your process and the rules of gardening, you get to enjoy the best part – the harvesting of the goodies.
Unfortunately, nowadays it seems like investing has become like the US college basketball single elimination game – you lose one game, you go home. A team’s had a winning season but then one bad game? Sayonara. It’s an unforgiving system that makes a decision based on one data point instead of seeing the data point in a greater context. Truly this is madness.
Lee Ainslie's Maverick Capital had a difficult third quarter, although many hedge funds did. The quarter ended with the S&P 500's worst month since the beginning of the COVID pandemic. Q3 2021 hedge fund letters, conferences and more Maverick fund returns Maverick USA was down 11.6% for the third quarter, bringing its year-to-date return to Read More
Even the best of companies slip up for one reason or another, so as an investor it’s your job to determine if the slip up is due to temporary and identifiable reasons. Investing is about recognizing patterns across multiple events not making conclusions based on a single one. Though sudden death games make for exciting television viewing, when it comes to investing let’s keep the madness where it belongs – in a sports bar and not in your portfolio.