Yesterday I described how it was possible you might have found yourself among the 5.9 billion people on the planet who missed Beyond Wall Street, the eight-part PBS documentary I got to host with my friend and colleague Jane Bryant Quinn.
Today, to make your pain all the more exquisite, the sadist in me sketches out what you missed. Each of the eight half hours focused on a single star:
- Foster Friess, whom I interviewed at his huge log cabin in Jackson, Wyoming, elected Jesus Christ chairman of his board some years ago, and is as sunny and positive a presence as I’ve ever encountered. But we didn’t select him for this or because he has a pet pig named Wilbur to whom he turns occasionally for 450 pounds of porcine investment advice. Rather, in overseeing upward of $10 billion, Foster embodies a style of investing that shouldn’t work but does, jumping from one stock to another in hope of catching huge updrafts in growth stocks just before they occur — and kicking out the winners as soon as a more promising prospect comes along, never mind the taxes.
- John Neff, whom I met at his home outside Philadelphia. He’s my kind of investor, stubbornly buying the stuff others don’t want — like Citicorp, once upon a time — knowing that one day the cycle will likely turn and they’ll want it again. I had long “known” Neff from his annual appearances in Barron’s roundtable. He racked up a famous record at the helm of the Windsor Fund, from which he not long ago retired.
- Barr Rosenberg does it all by computer. Except the one part you might expect to be done by computer — the actual trading. At his Orinda, California, firm, that’s done by humans. But the computer decides what to buy or sell, and the level of intelligence that goes into its software, along with the billions of bits of data that stream into it every day from around the world, are awesome. When I playfully reached down to one of the cables and asked “what would happen if I unplugged this?” Barr’s composure held — but barely. Brilliant, contemplative, unexpected (he raises chickens but, being Buddhist, will not kill them), he begs the question: can a computer beat the market? (Answer: his hasn’t, lately. Then again, neither has mine.)
- Bill Sharpe showed me a replica of his 1990 Nobel Prize, the real one being in a safe deposit someplace, and drove me around his Palo Alto neighborhood in a 1965 Citroen Deux Chevaux — and I actually got paid for this. It was Sharpe who pointed out that beating the market is only an achievement when the risk you took to do it is factored into the equation. And he wrote the equation. How does he invest much of his own money? Index funds.
- Mark Mobius is our man in Thailand. And Singapore. And 40 other emerging markets we didn’t follow him to. It’s a big world out there, and drifting down Bangkok’s Chao Praya River at midnight, and then visiting a factory that very likely makes the black nylon fabric in the umbrella that keeps you dry, I learned a good bit about it. This was before Asia collapsed. Take baht, Mark. And baht! And baht, and baht and baht!
- Bill Gross manages $90 billion or so in bonds, which has to be really boring until you realize that he somehow manages to squeeze an extra 1% return out of his portfolio year after year — an extra $900 million. But the image that impressed me even more, as we looked from his Laguna Beach living room out over the Pacific, was of a 53-year-old man determined to live to 100, getting it into his mind to run from Carmel to the Golden Gate Bridge — five back-to-back marathons over five successive days. On the last day of this run, his kidney ruptured. Blood was running down his leg. But he hadn’t reached the bridge, so he kept running. Only when he finished did he allow the ambulance to whisk him away.
- Gary Brinson, in Chicago, showed me a graph (although my eye did keep wandering to the Monet) which demonstrated something both interesting and important. Even though foreign stocks — Japanese stocks, say — are riskier than U.S. stocks, you can actually reduce the risk of your own portfolio, at the same time as you juice up your expected return a bit, by adding them to your mix. And this is a guy who oversees $120 billion, or, we calculated, roughly one quarter of one percent of all the investable assets in the world. So listen up.
- Peter Bernstein, it turned out, went to my high school way back when, had known my dad shortly after World War II, and now here we were in a helicopter off Santa Barbara flying to oil rig Irene to talk about risk. He’d recently published a whole book on the subject, Against the Gods: The Remarkable Story of Risk, a bestseller. As we landed on the rig in a stiff wind, hundreds of feet above the rough sea and the sharks below — well, I think there were sharks — the setting seemed right. Although a long-time horizon helps to reduce the risks, investing is anything but a smooth ride.
What I learned from these eight: First, there is more than one way to skin a cat. No single investment style is the “right” one. Second, each of these people had consistently done his homework, putting far more time and effort and passion into this than you or I would ever be likely to. Third, when we invest, these folks, and others like them, are our competition.
The lion’s share of the work on our TV series was done not by Jane or me but by a terrifically talented writer/director/producer named Eugene Shirley. Join us next fall, when we hope again to take you . . . beyond Wall Street.
Quote of the Day
Market economics as currently practiced often ... includes only what's countable, not what counts.~Rocky Mountain Institute
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