Lisa Rapuano founded Lane Five Capital Management in January 2007, after years spent at the legendary value shop Legg Mason Capital Management. Based out of Towson, Maryland, her firm’s seven core values evoke a true Buffett-like temperament and outlook. We discuss some of those values, and much more, in the interview that follows, which I conducted with Lisa on September 10, 2010. It has been published as transcribed.
Tell me a little bit about Lane Five Capital Management and what you and your team are working to achieve there.
Lane Five is an investment partnership. We’re structured as a hedge fund but we don’t really hedge much. We have the capability to short and we don’t really short much. What I’ve tried to do is create a firm that has the freedom to do true long-term value investing. While that sounds silly, because isn’t that what we’re all trying to do, I’ve been through a number of iterations and it’s hard to create the institutional freedom to do it the right way. And the pressure to manage to an index or to not hold cash or to trade around events or to manage month-to-month returns or to not have tracking error is endless. It’s really hard to build a business without playing that game. I’m attempting, then, to create a firm that can carve out a little bit of freedom away from some of these institutional constraints so that we can practice our craft. That’s why the structure of our firm is the way that it is.
There are a couple of other items, such as, I personally decided at some point in my life that I didn’t want to manage $25 billion when I grew up and that the process of asset gathering and also of just meeting the needs of that much money and investing directly with that much money was more than I could handle. So, Lane Five is a small firm. We have the capacity to be many times the size that we are, but even if we were many times the size that we are, we would still be a small firm. So this idea of being a small partnership is sort of designed so that we can be successful while still staying small and investing the right way to invest.
How did you end up as a value investor? Did you explore other investment styles before “seeing the light”?
I didn’t really think about the definition of what I am until my career was well under way. The guy who first hired me, he didn’t even hire me to be a research analyst. It was this little firm called Franklin Street Partners in Chapel Hill [North Carolina] and the guy was Bob Eubanks. I was the third employee. His firm was a start-up and he hired me to write the brochure. I also built the computer system—it was a start-up, so I did whatever needed to be done. He had an interesting style. There was a value component to it but it was much more story driven, he used a lot of charts, he cared a lot about growth. He was looking for stocks that go up, basically. That was my first exposure to investing. Over time, I started doing research for him.
When I left there and started working for Bill Miller [at Legg Mason], that was 1993. So, in 1993, Bill was not famous, not well-known yet. I came in there and I learned from Bill a more valuation-centric and driven part of the same way of looking at things. Let’s differentiate valuation from value—valuation was a central part of the strategy at Franklin Street that I learned from Bob. It wasn’t so much, “Is it a value stock?” It was more, “Where’s it trading, what is the valuation, and where should it be?” which is, in fact, value investing but it doesn’t necessarily go about it the way that, “Let’s look at what Graham and Dodd did. Let’s look at what Buffett does. Let’s structure this philosophically from the bottom up.” It approached it a little bit differently.
Then you fast-forward to the Bill years, which is really where I became a more mature investor. We were totally grounded in valuation, but I didn’t even read Ben Graham until 1997. So what’s interesting about it is that I don’t have that background of so many other value investors.
One of the guys I just hired just came from Columbia and Buffett and Graham are everything. Everything. The basis of the universe. I come to some of the same conclusions and practices but without the moral grounding, I guess is the way I would say it. For me, it’s not “This is the way that Buffett does it. This is the way that Graham did it. This is the way that I’m going to do it, damn it!”
Valuation was really, really important and was the driving factor of what we did at Legg Mason but our outcomes and what we ended up doing were very different than what other people who called themselves value investors were doing. Just like I don’t spend a lot of time thinking about what animal we’re in—bull, bear, duck, whatever—I don’t spend a lot of time thinking about “I’m a value investor.” The valuation is all that matters and I learned that from coming in from a different direction. It doesn’t matter what it does, who it is, who runs it. All that matters is, is it mispriced? And the only way to figure out if it’s mispriced is to use valuation. So, I came at it a little backwards.
The most appropriate Buffett quote that I learned afterwards is that all investing is value investing, because, by definition, nothing is going to go up more than the market if it’s not mispriced at the initial position.
Warren Buffett’s been quoted as saying temperament—not intellect—is the most important quality an investor can have. How do you think your own temperament has played into your success as an investor?
I think there’s a couple things. Let me start by talking about the portfolio attributes I’ve chosen. You choose to manage money the way that you think you can make a difference, that fits your temperament and your style. I am very good at ignoring noise, the day-to-day stuff just isn’t important, and I will go months without trading. I’m not sure how people who trade every day and are looking at short-term trends and optimizing trading strategies and things like that sleep at night. For me, it’s patience, it’s low activity, it’s thoughtful, it’s moving more deliberately. I don’t know why I have been particularly good at doing that, but I do know that it’s an advantage that I have over a lot of people. I just don’t feel the need to “do something” a lot of times.
Now, I don’t know if that’s a learned behavior or an inherent behavior. I think it’s probably a little bit of both, because I’m not the mellowest person in the world who just sits around and, you know, listens to the Grateful Dead. I’m actually extraordinarily competitive and I’m also a sprinter—not even a long-distance runner, which would seem to make more sense. But that requires a great deal of patience and discipline and work, even though your race is only twenty-three or sometimes twenty-four seconds long. So I think that it’s simply that to me, that is the best way to manage your own emotions, that is the best way to lower your number of mistakes, and it simply makes sense to me. So I can’t say that the low-activity, long-term-thinking thing is a personality trait but I definitely adopted it because I think it’s the one that works.
Another thing, and I think this is probably more temperament than learned behavior, I care a lot about figuring out something and very little about what other people think and so I’ve always been a little bit unconventional. So that piece of my personality and that piece of my temperament is suited to the long-term value investing way. Once I figure something out and I put something together and I have a lot of confidence I can ignore what everyone else has to say—I don’t ignore evidence—but I can ignore the noise and the opinions of people and continue to build my confidence. That’s not hard for me. That’s something I find to be very easy. That could come from training as a history major, looking for long-term trends and threads of truth.
Buffett talks about judging himself strictly by an inner scorecard, not an outer, meaning he doesn’t care what anyone else thinks. Isn’t it hard at times to operate that way, though?
When you’re not doing well, in the shorter term, which can happen to anyone, sometimes it’s because you’re making mistakes, sometimes it’s because you’re not applying your process correctly, but sometimes you are and you still aren’t doing well. You have to combine these two things of being adaptive, open-minded, and being a learning machine with also not changing your stripes or chasing the latest trend. It’s a really fine line, a really difficult line to walk.
There’s a lot of successful investors of all stripes but my particular strength and my particular adoption of long-term value is because there are kinds of things where I can see a different future than other people see. I can have confidence in something where the market is discounting complete uncertainty. There’s an evidence-based part of it and an analytical-based part of it but there’s also a time horizon part of it where I want to look through and see how this is going to shake out. I’m going to look at how lots of other things have happened in the past and use my ability to look far and wide to do that and I think that part comes from having this drive to understand things, whether that’s from reading history or understanding why science works—I don’t care, whatever tool I have to use to figure it out, I will use it. Having this sort of multidisciplinary viewpoint about the world helps with that.
Which investors have you admired and learned from? What lessons have they taught you?
I admire and learn from anyone who has a really good record and I try to figure out how they got there. I’ll read an interview with anyone and ask myself what do I have in common with this person and what do I not, and why not do it that way? I use these as opportunities to figure out how I could do something better but there are obviously some people I bond with more than others. It’s interesting; they’re not necessarily the ones who do it just like I do.
Obviously, Bill Miller is my hero. He gave me the building blocks to build my career, and he and I work together very, very well. And we created a process when I was at Legg Mason from 1993 to 2003 that I think was exceptional. I learned from him and he learned from me, I hope, a little bit. We had a very wonderful time.
Bill is the only one of these people I actually know. All these others I don’t know. I read what they do and I look and say, “Parts of what they do has helped me do what I do better.” The weirdest one of these is Bruce Berkowitz. When he talks, it’s like it’s coming out of my mouth and yet we never own the same stocks, either. It’s just when he talks philosophically I really feel a camaraderie with him.
I have learned a lot from reading the ones that everybody reads, the Seth Klarmans and the Ben Grahams and the Warren Buffetts. And I try to take what they’re saying and learn from them, but what’s different about me is that I don’t try to be these guys. I don’t take everything they say as gospel. Because it’s what suits them and that’s why they’re good. They found what they’re good at.
I don’t think you can adopt someone else’s style. I don’t have an investing idol, someone I’m trying to be just like. I try to learn from each of them, and I think how am I different from this person and how am I different from this next person?
Even if you talk to Bill Miller, who I’m still very close with, he will tell you all the things that are wrong with me, one of which is that I have too high of an evidentiary threshold, meaning I have to do a lot more analytical groundwork before I’m comfortable with something. I need a higher degree of certainty than he does. But if you look at my degree of certainty that I need, it’s probably much, much lower than what Buffett needs. Or what Seth Klarman needs.
So I read them all and I think they’re all amazing. Some of my favorite people to read are also the ones who are out of favor. I try to find out, “How do they react in times of adversity?” All of these guys who have records that are really good, and better than mine right now, probably—they all have something to teach me. I try to figure out which of the things that they’re doing are applicable to my skill set, my temperament, my firm, and my team. And if it works, I will try to adapt to incorporate it.
I think this is an important point, because as we talk about in the book, Buffett started out as pure Ben Graham, but he would become more qualitative and more Phil Fisher–like over the years, thanks largely to Charlie Munger’s influence. It’s important for people to realize that they can and should learn from the established masters, but they should never be afraid to do things their own way.
Right. You come from a different set of experiences, you come from a different generation, you have a different education, you have a different brain, you have different parents. So what drives me crazy is pure Buffett worship. Sure, Buffett’s great, he has a great record, but he’s not going to tell you everything that’s going on in his head. You can’t replicate it, you can’t copycat. This business is way too competitive to try to be what somebody else is being. As I said at the Value Investing Congress one year, “I am not Warren Buffett and neither are you.” So just be careful not to try to be someone else. Figure out your own place and just be yourself.
In the list of core values for your firm, Lane Five Capital Management, you list “Work with brilliant people.” We know Buffett also values his relationships, whether he’s buying an entire company and leaving the current management intact, or buying a piece of a public company with a management team he admires. Two questions about this, then—how do you define “brilliant” and how do you suggest the average investor try to assess the management of companies he or she’s investing in?
There are three kinds of different people you work with in our business. There’s your team, the people who work for you or work with you. There are your clients. And then there are the companies you’re invested in and the people there. We try to apply that core value to all three.
I define “brilliant people” in the following way: For the people who work for me or with me, the other partners in the firm—their brilliance doesn’t have to be the same as my brilliance. There is a pure intellectual firepower issue there. The most important piece is curiosity and having a broad range of interests, and having a fire in the belly to figure stuff out, whether it’s cognitive psychology, or the best mechanism for where you put your hand when you bring the free throw up, or economics or political science or whatever. A thriving curiosity is the single most important piece for me, because even if the person has a few points’ lower IQ, if they’ve got that thriving curiosity, they’ll make up for it. I like voracious readers. I like people who have done lots of interesting things.
Back to the unconventional thing, I really don’t like people who have had a career that is just what they tell you to do—Ivy League, Goldman Sachs for two years, business school, try to get a job at a hedge fund. Those people don’t interest me. So that’s how I define brilliance. And the reason this is one of our core values is that I have a style that’s not for everyone, as a client, either. So what happens is that there’s a self-selection mechanism for the people who are my limited partners—my partners in my fund versus my partners in my firm. They tend to be people who I enjoy talking to, also. I can’t tell you how amazing that is to have happen.
And then there’s the management piece. I bend the rules a little bit here because brilliance has lots of different ways of manifesting itself. In fact, I’ve found that just because somebody’s a really smart guy or girl, that doesn’t mean they’re a great manager of a company. So what I’m assessing on that side is almost always just whether they are very good at capital allocation. That’s not just whether or not you buy back stock or what kind of debt you use. That’s also what R&D you fund, how you choose to grow, do you understand earning excess returns in your business, and do you understand when it’s appropriate not to invest. So I judge the quality of management almost exclusively on whether they get that capital allocation piece of the pie.
I try to judge that first without meeting them, because a smooth person can really mess you up a little bit. If I’m investing in a company that’s not necessarily a turnaround, that’s more just an ongoing business, where I can look at the record and make a reasonable assessment of it, I try to judge it mathematically. What have they done? Have they bought back stock when it made sense? Have they levered up when it made sense? Have their acquisitions been value-added? Have they improved returns on capital? Are they good at that? That’s a significant measure as to whether that’s good management or not.
Then there’s the ones where you have to ask, “Are they going to get it?” That’s a much more difficult assessment to make. Then you’re relying on human judgment, which is the least reliable of the tools that we have. I also have a lot of stupid rules about certain types of managers I just don’t want anything to do with. They’re things like, “What is their behavior like? Are they really promotional? Do they seem to be too geared up on growth? Are they too slick around the edges? Are they too salesy on the whole thing?” You know, basic questions about integrity. I prefer sort of boring people who are low-key, down-to-earth, and interested in doing the right thing rather than convincing me that they’re the greatest thing since sliced bread.
For an average investor, they can do the mathematical thing that I do, which is look at their history of capital allocation. That’s something that anyone can do, because you just need the 10-Ks to do that. But the objective judgment of a management team is much tougher. You can’t really tell from seeing a guy on CNBC if you can trust him or not.
You can learn a lot from the conference calls, though. You can learn a lot from how they answer the questions, whether they answer them straightforwardly, and how they frame their answers, whether they’re aggressive or conciliatory. But you are a little bit out of luck, as an individual, not having access necessarily to them. And frankly, even as a small firm, I don’t always have access to CEOs and CFOs. I usually have to win my way into their hearts by proving that I’ve done all the work and that often takes a long period of time. Eventually I get in. Sometimes it takes a lot of phone calls, though, asking questions that the IR person can’t answer to demonstrate my interest and my integrity and the work that we’ve done before finally getting the CEO or the CFO to pay attention.
Every once in a while, you come across a management team that just gets it. For example, when Ed Breen took over Tyco in 2002 the company at that time was a disaster. He would just get on the call, and this is a very complicated company, and he would talk about it in terms that were simple but not simplistic. He narrowed it down to the key elements. You’d get off his conference calls and think, “You know, it’s just not that hard. Why do other companies have to make it so hard?” You’d wonder, “How come this guy gets it?” and then you’d listen to another call, where maybe they listen to Wall Street too much, maybe they don’t understand their constituents, they think they have to change their story. You’d just come off and think, “He doesn’t get it. He doesn’t get how to drive this particular business and how to communicate it to Wall Street in a simple manner. Or he’s just trying to tell us what we want to hear.”
I think anybody can listen to conference calls and determine, “Does this person sound like they really understand their business and if I worked for him would I do what he says? Would I be excited and on board?” There’s just a yes or no. Does the management get it or does the management not get it? Believe it or not, there are more companies where the management doesn’t get it than there are where they do.
Another of your firm’s core values is “Learn and read widely.” This is also something that Buffett’s legendary for, as is his partner Charlie Munger. Why do you think this is important?
It matters because the world is complex and the world is adaptive. I don’t know why this is, I don’t have a theological or epistemological foundation for this, but it has come to my attention time and time again that there are patterns in the world that repeat across seemingly unrelated systems. So there are things about the markets that appear to me to be very similar to the way that biological systems work. Or there are analogies, there are recurring patterns that are similar, and we sure know a lot more about biological systems than we do about the markets, and so if I can study biological systems and they can give me any little insight into how this works, that’s helpful. And it’s really indirect, so I don’t want to make it sound like, “Well, I study nerve systems and I figure out that this works that way.” It’s really very indirect and very amorphous.
There’s also the element of historical patterns, not just systems, but events, such as the way that wars happen, the way that cultures evolve, the way that demographics have affected countries, the way that natural events have affected countries—again, amorphous, indirect, but they provide greater connections in your brain, your brain becomes more robust, and the pattern recognition machine becomes better. You make connections that other people might not make. That’s at a very broad level.
At a more practical level, a curious person is more likely to uncover the piece of information that will be the evidence you need to have higher confidence than the next guy that is not curious enough to be resourceful. You know, someone who’s basically like, “I get this. I understand how this works. I don’t need to think about it all that much.” Whereas someone like me, or the people who work for me, are always asking, “How else can I think of that? What am I missing? What else is happening? What else could I do? How else could I turn this on its head? What else could I research to figure out if this is right or not?”
Now, you have to be careful with that, because you could work on one thing 12 hours a day for the rest of your life and still not have 100 percent information. But it’s the drive to be curious, and the person who naturally wants to learn and read widely is more likely to be a better analyst. Then, secondly, the act of reading widely and broadly provides you with a more robust set of patterns and connections and networks that, at the margin, I think help you understand how the world works.
What do you read every day?
Well, every day is less important than over time, but every day you do have to do your defensive reading. You have to keep up with what’s going on, and read the business news, which is annoying, but you have to. That is more defensive than offensive.
There’s a couple of big categories of things, so let’s look at my kind of reading schedule. Number one, I always keep room for reading novels and I know that might sound like a girly thing to say. I’ll let the boys all read history and biographies—I know that because I just interviewed five hundred people, and every boy, when you ask them what they like to read, they all say, “biographies.” I keep room for novels, though, because I think novels are insights into human psychology and I enjoy them and they help you get off your 10-Ks and 10-Qs. I’m very wary of people who say I don’t have time to read novels because I have so many 10-Ks to read.
Outside of that, there are three categories. First is science. I belong to the Santa Fe Institute, which is something that Bill [Miller] introduced me to. It’s for the study of complex adaptive systems and I really, really love it. I don’t understand 80 percent of it, but I love it. And it’s, again, sort of indirect and amorphous—you let it wash over you and occasionally something comes out where you go, “Oh my gosh, I understand now how this works.” So I enjoy reading about science. It’ll vary—I’ll go through an evolution period, I’ll go through a psychology period, I went through a big brain period last year. Climate stuff is really fascinating to me, too.
Another category is strategic or competitive—these are more business books, but they might not be 100 percent about business. They might be about different competitive ways of looking at the world. It might be rereading [Michael] Porter’s Competitive Strategy. It might be reading any books about how industries develop and how to think about competitive positioning. That’s also reading Michael Eisner’s book, or reading Disney War, or reading Good to Great, or Roger Lowenstein’s books—those sorts of books, where you don’t always have to read the whole thing, but they can give you insight into how a business works and they’re really helpful. Then, I’ll do a lot of behavioral finance stuff—that might not be books as much as papers, going back and reviewing some of the stuff that Andrew Lo is doing or those kinds of things.
What are some of your favorite books on investing or business?
Let me tell you the books that I reread. The ones that I read over and over again are Peter Bernstein’s Capital Ideas, the first six or seven chapters of Robert Rubin’s uncertainty book (you can stop once you get to the part about Latin America—I’m talking about where he lays out probabilistic thinking in the beginning), the Jesse Livermore book, Education of a Speculator, Moneyball. I’ve read a million other books, but I don’t go back and reread Security Analysis. I actually would go back and read The Intelligent Investor more than I would Security Analysis. Those are the ones I reread. The ones I remind myself, maybe not every year, but maybe every other year or so, just to remind yourself why you do what you do.
What’s been your biggest mistake as an investor? What did you learn from it?
I have made so many mistakes I have a hard time picking one. But I can tell you that they are, essentially, all the same mistake. First, there are two things you need to differentiate in our business: There’s being wrong, and there’s making mistakes. They are not the same thing. I really focus on process versus outcome.
Being wrong is when you applied the process correctly, and the outcome was bad. You look back and you say, “OK, well, based on the information I had at the time, would I have made the same decision?” If you determine that you applied your process correctly and that you did the best you could and you just made the wrong decision with the right process, fine. Accept it and move on.
The ones that are bad outcomes because of bad process—or sometimes you can even have good outcomes with bad process, but we’ll focus on the bad outcomes and bad process—those are the ones you have to really worry about.
Here’s a recent example of that. I’ve made others, but I’ll give you a recent one. I lost a lot of money in 2008 in a lot of things, but the one that drives me bananas was investing in the Renault stub—you know, the car. Our analysis was actually good. It’s not like there was anything about Renault that we didn’t know or understand, that we didn’t get. This was a trade where you buy Renault and then you short Volvo and Nissan against it because they owned 44 percent of Nissan and 20 percent of Volvo Truck, so you could basically create Renault’s core business for free. So then 2008 happened, the economy tanked and obviously car companies would do particularly badly at that particular moment so we ended up losing a lot of money because not only did it go down, but Renault went down more than Nissan and Volvo. So a stub that was trading for zero went into massive negative trading. So fine, it’s an understandable mistake—how could you have known the economy was going to fall apart? I’m not beating myself up over that part.
The two things I did in that mistake that absolutely drive me to distraction are, No. 1, I normally save myself from massive errors like bankruptcy and things like that by avoiding businesses like car businesses. I will do turnarounds, I will do messy things, but I don’t usually do that. As I look back on it, I think probably because things that appeared cheap to me at that point were few and far between, at the beginning of ’08, I overdid it on this one. I put way too much of my portfolio in it because it was so cheap and it was so easily explainable. So it was putting too much in it, in a business that wasn’t a good business, so when you are wrong you don’t get saved by the goodness of the business.
And here’s the additional lesson—probably the one that’s going to be the easiest never to repeat again—I got so much positive feedback on this one. Everyone said it was brilliant. I presented it at the Value Investing Congress and the whole world was like, “Oh my God, that’s the best idea.” I’d talk about it in client meetings and they’d be like, “Oh it’s so great. It’s so wonderful. You’re going to make a lot of money on this.” It was too easy by half.
Letting your confidence be affected by other people’s reaction to it should have been a giant red flag because normally when I invest in something, especially at the beginning, not after it starts working, everyone thinks I’m wrong. No one ever tells me how great it is.
There’s a lot of little lessons in there, but the big one I think is that external reinforcement of the idea doesn’t make it better. And therefore I probably didn’t recognize the imperfections of it. I got overconfident. And we just did terribly. It was awful. Even if it hadn’t been going into 2008—so let’s take that piece out of it, which is a whole ’nother can of worms—[there was] the overconfidence in a bad business and too large a position. Part of our process is avoiding the things where if you’re wrong, the business doesn’t help you, and actually hurts you. The nature of the business itself hurts you. It was just stupid.
You mentioned looking around and not finding any ready bargains at the time you did this. Do you feel like you lowered your standards?
Yes, totally. The lesson is “When there’s nothing else to invest in, don’t invest in anything.”
What lessons, if any, did you learn from the market meltdown in the fall of 2008? Have you changed anything about your investing style or approach since then?
Yes and no. We had a terrible 2008. We got caught like everyone else. We started going long way too early. I started getting more aggressive right before Lehman went down. There’s a good lesson there about patience. Valuations aren’t necessarily fleeting. You don’t always have to be buying aggressively into dips. You can be a little bit more patient. That’s probably a lesson that all value investors have to learn over and over again. That’s sort of a self-reinforcing thing.
But from a “changing” perspective, I’m always a little early. When something reaches a price that I think is a good price I will start buying it and the market might decide to offer it at an even better price for a relatively long period of time before it starts to bottom out. So I just have to accept that that’s part of our process, and I can’t help it. That’s just part of investing. There are times I’ve looked at and said, “Well, I shouldn’t have been so early. I shouldn’t have gotten in so fast.” But at the same time, that’s also part of where our successes have come from, so I can’t just eliminate that without eliminating some of our major successes over time. Where I can do better is on what I’m already holding when things start to fall apart. One of the dangers that long-term value investors like me have is that we will look through divots, and differentiating between divots and giant black holes is probably something that I could be better at.
We knew how bad the businesses would get. We didn’t react to it at all. There are some businesses, again, that are terrific and you don’t want to react but there are other businesses that are not as good and you probably ought to react. We’ve been much more conscious of describing our businesses when we’re buying them up front as to whether these are things you’re going to hold through thick and thin or are they things where, should you start to see evidence of deterioration, you need to be a little more aggressive about selling. Or also when they get closer to fair value, be more aggressive about selling.
But we went back and we looked at everything we did wrong and a lot more of it was execution than process. So we didn’t change our process much. We added some safety measures. We tried to add some better analysis of downside, but when you have trading downside, or mark-to-market downside, it’s different than when you have business downside. So when we looked at it, we said, “Some of the things that caused us to lose money in 2008 will happen to us again, and oh well.” And there were some other things that we think we’ll be able to be more cognizant of, like deterioration in the businesses that are really not the kinds of businesses that you want to hold through any sort of downturn.
I know 2008 was bad and I don’t want to sound cavalier about it, but I’m actually pretty happy that we didn’t change too much. I’ve seen a lot of people that changed everything they did and were reactive and that’s really bad. So yes, we learned some things and yes, we changed some applications of our process and we tried to emphasize the things that might have helped us do better, but philosophically the core is still the same. We didn’t suddenly decide we’re going to be fully hedged. We didn’t suddenly decide we’re going to be macro traders. We didn’t suddenly decide to go short. We said, “We made a very conscious decision to do it this way and that’s because that’s what we think works for the long term and I still believe that.”
If you had one piece of advice to pass along to beginning investors, what would it be?
Don’t watch CNBC. That’s sort of flip, but the real message is “You have to find your own strategy.” You can’t copy or react to other people. It’s a very self-analytical process. Focus on what you do well and what your skill set is and don’t worry about what everybody else is doing.