Posted by: michaeldavidpower | October 7, 2009

Is this the world we fund managers see before us?

Great article from John Authers in the Financial Times on 02.10.09 called:

Triumph of common sense over benchmarks.

He is less and less a fan of benchmarks and in a world where our leading Index companies only give Emerging Markets an 11% weighting, neither am I.

Here are a few quotes about navigation which always struck me as relevant to the art and science of fund management.

Sir Francis Drake’s favourite prayer is almost a hymn  against benchmark hugging.

Disturb us, O Lord, when
We are too pleased with ourselves;
When our dreams have come true,
Because we dreamed too little.
We arrived safely,
Because we sailed too close to shore.

Disturb us, O Lord, when
With the abundance of things we possess,
We have lost our thirst
For the waters of life;
Having fallen in love with life,
We have ceased to dream of eternity.
And in our efforts to build a new earth,
We have allowed our vision
Of the new Heaven to dim.

Disturb us, O Lord, to dare more boldly,
To venture on wilder seas
Where storms will show Your mastery;
Where losing sight of land,
We shall find the stars.
We ask You to push back
The horizons of our hopes;
And to push us into the future
In strength, courage, hope, and love

I do not think Magellan would have been too fond of benchmark hugging either!

The sea is dangerous and its storms terrible, but these obstacles have never been sufficient reason to remain ashore. Unlike the mediocre, intrepid spirits seek victory over those things that seem impossible. It is with an iron will that they embark on the most daring of all endeavours: to meet the shadowy future without fear and conquer the unknown.

Not that the likes of Leonardo da Vinci would have ever embarked on a journey without science by his side.

“He who loves practice without theory is like the sailor who boards ship without a rudder and compass and never knows where he may cast.”

That said, only Swensen-style endowment investing is lucky enough to be able to take the Mark Twain 20 year view.

“Twenty years from now, you will be more disappointed by the things that you didn’t do than by the ones you did do.

So throw off the bowlines.

Sail away from the safe harbour.

Catch the trade winds in your sails.

Explore.  Dream.  Discover.”

As adventurous as it may seem, probably only such investors as Swenson – and Christopher Columbus – can afford to take the long term macro contrarian view.

“Nothing that results from human progress is ever achieved with unanimous consent.  And those who are enlightened before the others are condemned to pursue that light in spite of the others.”




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