HEDGEHOGGING

Introduction

• So in the hedge fund world “it’s still the same old story, a fight for love and glory, a case of do or die as time goes by.” Buy sheep, sell deer.

Ch.1) The Triangle Investment Club Dinner - Hacking Through the Hedgehog Jungle

Ch. 2) The New Hedgehogs May Have Been Golden Boys, but They Still Bleed Red

Ch. 3) Short- Selling Oil - The Crude Joke Was on Us

• Investment shorts are situations in which rigorous security analysis identifies companies whose business prospects are either deteriorating or are materially worse than what is priced into their stocks.
• This guy likes to sell short and stay short on big, famous stocks that have gone up a lot and that the institutions love. He studies Fortune magazine’s list of the most admired companies for new victims.

Deep Analysis Can Get You In Deep Trouble

• Investing on the basis of value, not price momentum, is our religion.
• Warren Buffett articulated this philosophy best:
  “Suppose the price you could sell your home at was quoted every day. For several month the quotation steadily declined. Would you then sell your home, the home you were comfortable in and satisfied with, just because its price was declining? Of course not! In this sense, an attractive investment is similar to a home you are happy to inhabit.”

Years Of Love Go Down The DrainU

• confirmatory bias, in other words the tendency to collect all the information that agrees with your position and to ignore the information that doesn’t. Behavioral theory teaches that the best antidote to this bias is to listen to the opposite side of the case and then dispassionately to identify the logical flaws in the argument.

What I Learned From The Early 1900s: The Market Hasn’t Changed That Much

• Reminiscences of a Stock Operator by Edwin Lefevre (Markets haven’t changed that much a century later. It is, by far, the best trading book ever written.)
• He stressed how crucial was a deep understanding of human psychology and the interplay of greed and fear. Trading was much more about human nature than tips and hunches.
• “Without faith in his own judgment no man can go very far in this game.”
• Of course none of this “sitting tight” means that if the fundamentals of your investment deteriorate, you don’t sell your long or cover your short. As John Mynard Keynes famously said, “If the facts change, I change my mind, sir. What would you do, sir?”

Ch. 4) Short Selling Is Not For Sissies

The Caribbean Casino Saga

• This was exactly the kind of promotion that Jock relished and had made big money shorting. (내부적으로 이슈가 있지만 억지로 만들어 가는 일종의 작전주인데 시장에서는 몰라서 주가가 올라 있는 종목을 찾아서 Short 투자)

Frantic Clients And Hostile Brokers

• Unfortunately, there is no happy ending to this story.
• On June 1, he sent a letter to his investors, informing them of the damage and that he had bought back most of his short position.
• The real irony was that in the long run, Jock was totally right about both the earning power of the company and the stock price.
• However, the bad guys won. Lord Howard and his associates exercised most of their options in the 50s and made big money.

The Agony Goes On And On

• On December 30 and 31, we closed our position.
• On the morning of January 3, 2005, the first day of the rest of our investment lives, oil opened down 4.5%. Although we didn’t know it, from the beginning, the crude joke was on us. Short selling commodities is not for sissies.

Ch. 5) The Odyssey Of Starting A Hedge Fund - A Desperate, Frantic Adventure

Big-Time Money Raising At The Breakers

• What do prime brokers do? They provide securities to cover short sales, make margin loans, clear trades, provide reporting services and custody assets, provide research, and help with money raising.
• In this milieu, a Swiss accent is worth and automatic 50 IQ points, and an Oxbridge tongue is worth 25. Plain old American is definitely declasse.

The Fund Of Funds Is A Tough Customer

• LTCM, a big hedge fund run by a bunch of pointy-headed Nobel Prize economists, blew up when a series of three standard-deviation events occurred simultaneously.
• Everybody was deeply embarrassed, and ever since the big institutions have been obsessed with risk analytics and throw around terms like stress-testing portfolios, value at risk(VAR), and Sharpe ratios.
• “What we do is similar to being the manager of a major league baseball team. The trick is to have the intuition to take your pitcher out of the game just before, not after, he’s been hit hard.” Most funds of funds focus not just on the raw performance numbers but also on the sociological factors. They monitor whether the successful hedge-fund managers in their stables are getting lazy and complacent as they get richer. They watch for divorces, third homes, and falling golf handicaps.
• The numbers show that the funds of funds do a good job of picking the better horses and avoiding the losers. For example, over the five years that ended in March 2003, the median of all hedge funds compounded at 7.8% a year while the S&P 500 was declining 3.8% per annum. In summary, the funds of funds are effective diversifiers. Trying to cherry-pick one or a few individual hedge funds is challenging task that requires luck as well as knowledge. For big institutions, the funds are an important layer of fiduciary insulation.

Searching For The New Messiah

• (…) the buyers at The Breakers are all obsessively searching for the new messiah: (…) The trouble is that, even if they find their prodigal wunderkind, the odds are he eventually will be spoiled by wealth and adulation. Success inevitably breeds hubris in one form or another, and in the hedge-fund business, arrogance eventually levels the exalted. Hubris leads to private jets, multiple golf clubs, homes in the south of France and Nantucket, and young wives. However, when certain guys get rich, they retire to follow some childhood dream to save the world.

Headaches, Insomnia, And Gloom

• I told them I was not interested in golf or cruises to the Greek Isles, but above all I was doing it because professional investing was the best game in the world, and I relished the competition. In addition, I said, it was the only game where age may actually be an advantage.

Ch. 6) The Roadshow Grind - Blood, Sweat, Toil, and Tears

Peter The Great: An Investment Nymphomaniac

• (Peter the great said:) “I don’t believe in diversification. I don’t like people or wines equally, so why build a portfolio equally? Own monster positions of what you really like and leverage them up, or else you’re only practicing. It’s all greed versus fear, and risk control is a misallocation of energy.

Finally, We Get A Break: Dinner With A Truly Great Investor

• Over the past half century, your odds of identifying a growth stock you can hold for 20 years are 4% and only 15% for 10 years. Even for 3 years, they are just a little more than 50%. (…) And what the study doesn’t say is that when a growth stock falls from grace, the landing is not just hard, it’s usually a crash.

Size Is The Enemy Of Performance

• Sean is very professional, and he makes it clear that he is ruthlessly managing a portfolio of hedge funds. His only loyalty is to his portfolio and to his investors. Personal relationships with hedge-fund managers have nothing to do with it.
• Hedge fund investing is so demanding, and strong investment performance is so exhilarating that many of the best investors fall victim to fatal attacks of hubris, burn out, or get distracted.
• I wonder about analysts in general. (…) Are they a distraction or an asset? I am not sure.
• Managing money is about one thing: performance. You are not trying to win a popularity contest, and you certainly don’t want the hired help wasting your time. The same applies to not squandering time on pleasantries with salespeople. Their job is to chat you up. Your job is to ingest information and make good decisions.

Meeting Margaret Thatcher

• Remember the famous picture of Thatcher speaking at dinner in Number 10 as Ronald Reagan, seated next to her, stares raptly up at her. Reagan sent her the picture with the following inscription in his own hand. “Dear Margaret, As you can see, I agree with every word you are saying. I always do! Warmest friendship. Sincerely, Ron.” He meant it!
• Today she was as elegantly dressed as ever, and as usual.

Ch. 7) The Run-Up and Haunted by Remembrances And Doubt

A.W. Jones Was The Pioneer

• He(Alfred Jones) conceived the idea of the modern hedge fund: a private fund that uses leverage to go both long and short on stocks, actively manages its net long exposure, and charges a performance fee. There were plenty of leveraged long pooled funds in New York before the Crash, but my father told me that none of them systematically controlled risk by hedging with shorts.

Nothing Like A Punch In The Mouth The First Day

• (John Maynard Keynes said:) “Unfortunately the markets can remain irrational longer than you can remain solvent. I advise damage control.”
• When you are managing risk in a portfolio, you always have to remember that there is a possibility of a catastrophic outcome.
• I discovered that in crisis decision making, the key is to find the least bad option, but, as my father said to me afterward, “In your investment trial-by-fire, it is good that you learned the lessons of the danger of leverage and the need to cut losses. However, don’t learn too much from them. Don’t become like Mark Twain’s frog that never would sit on a stove again after being burned and as a result froze to death.”

The Great Bear Market - And The Bottomless Pit In My Stomach

• (Ten Years of Wall Street by Barnie Winkleman) “No discussion of the interrelations of stock prices and business conditions would be complete without emphasizing that in the clash of speculative forces on the exchange, the emotions play a part which is not paralleled in the normal processes of commerce and industry. The golden mean is non-existent in Wall Street, because the speculative mechanism does all things to excess; even the reactions from the heights of phantasy and from the depths of despair are accompanied by convulsions which are distinct from the calmer tenor of business. Those who seek to relate stock movements to the current statistics of business, or who ignore the strongly imaginative taint of stock operations, or who overlook the technical basis of advances and declines, must meet with disaster, because their judgement is based upon the humdrum dimensions of fact and figure in a game which is actually played in a third dimension of the emotions and a fourth dimension of dreams**.**

Ch. 8) Hedgehogs Come In All Sizes And Shapes

• A questing mind, the gambling instinct, and the ability to make tough decisions on inconclusive evidence are all essential characteristics. There are no Hamlets in the ranks of successful investors.

It Takes Courage To Be A Pig And Totis Porcis

• (Tim said:) “Diversification is an enemy of performance. (…) Running a portfolio is a solitary activity. For me it doesn’t work to have partners. In the end, one mind in the dead of night has to make the buy and sell decisions.” Teams, much less groups, are about compromises and they are bound to make less good decisions than an individual who is focused on one portfolio in which his own money is at stake. He says he can and often does make wrong decisions, but at least the decision-making process is uncontaminated.
• When I asked him how he got his investment ideas, (…) he(Tim) said that the trick was to accumulate over time a knowledge base. Then, out of the blue, some event or new piece of information triggers a thought process, and suddenly you have discovered an investment opportunity. You can’t force it. You have to be patient and wait for the light to go on. If it doesn’t go on, “Stay close to shore.”
• Your focus has to be totally on your portfolio and what is happening in the world and in markets. Your objective is performance and not to build an enduring firm or develop brilliant young macro analysts. Almost all of the other really successful hedge-fund managers I know want to create a legacy, build a business that survives beyond them. Often this obsession becomes their downfall.

The Bearded Prophet Of The Apocalypse - Vince

• (Vince quoted Ecclesiastes)
  • To everything there is a season, and a time to every purpose under heaven:
  • A time to be born, and a time to die; a time to plant, and a time to pluck up that which is planted; …
  • A time to weep, and a time to laugh, a time to mourn, and a time to dance; …
  • A time to get and a time to lose; a time to keep, and a time to cast away;
  • A time to rend and a time to sew; a time to keep silence and a time to speak.
• Why do I listen to Vince? First, because we have to be conscious of the doomsday scenario. We need at least to keep it in mind, so we can pick up clues and react if it starts to happen. (…) Second, (…) unfortunately there is a germ of truth in what he says. The 1930s were a wipeout. A recurrence is not impossible.

Finding Meaning In All The Noise And Babble - Taleb

• The serious investor’s monumental task is to distill this overwhelming mass of information and opinion into knowledge and then to extract investment meaning from it. Meaning presumably leads to wisdom, which should translate into performance - the only thing that matters.
• Nassim Nicholas Taleb who runs a hedge fund has written a book, Fooled by Randomness, which says a lot of perceptive things about noise and babble. One of Taleb’s major themes is that the wise man listens for meaning, but the fool gets only the noise.
• Greek poet, C.P. Cavafy, wrote: “In their intense meditation, the hidden sound of things approaching reaches them and they listen reverently while in the street outside the people hear nothing at all.
• Taleb says he does it by denying himself access to information except in rare circumstances. “I prefer to read poetry. I am aware of my need to ruminate on park benches and cafes away from information, but I can only do it if I am somewhat deprived of it.”

What Makes A Superstar Investor? - Jake

• You can’t read everything and talk to everybody, he said. There simply are not enough hours in the day. As far as babble is concerned, you must be disciplined and control how you spend your time. You can’t let others control it for you, which often happens in the office environment of big investment management companies. Keep your office door closed to discourage casual chatterers. Don’t answer your own phone; let your secretary do it and take the message. Don’t be compulsive about reading every piece of trash that appears on your desk or screen. Don’t let salespeople chat you up. Their job is to talk to you. You must be rational by managing your time and not allowing others to waste it. You may have to be rude sometimes. You may have to cut people off. Your investors are not concerned if the salesperson from Goldman Sachs likes you or not. All your investors care about is performance.

Ch. 9) The Violence Of Secular Market Cycles

• An Australian oil man, John Masters:
  You have to recognize that every “out-front” maneuver is going to be lonely. But if you feel entirely comfortable, then you’re not far enough ahead to do any good. That warm sense of everything going well is usually the body temperature at the center of the herd. Only if you’re far enough ahead to be at risk you have a chance for large rewards.

The Difference Between Secular and Cyclical Bear Markets

• A secular bear market is a decline in the major stock averages of at least 40 percent - and considerably more in secondary stocks - where the decline lasts at least three to five years.
• By contrast, a cyclical bear market is a fall of at least 15% but less than 40% that rarely lasts more than a year.
• Length is an important part of the secular bear market definition, because time and sustained pain are what alter behavior patterns and change society.

The Secular Bear Market Of 1969-1974

• Remember: “The stock doesn’t know you own it.” That is so true. There is no reward for being a faithful holder. It is those holds that are too cheap to sell but not attractive enough to buy that make a portfolio stale and retard performance.
• It’s interesting that Bernard Baruch and Jesse Livermore, probably the two greatest private investors of the first half of the twentieth century, whenever they felt stale, uncertain, or uneasy, liquidated their holdings and took a vacation. When they returned, it was their practice to start over by buying a completely fresh portfolio.

Ch. 10) The Battle for Investment Survival - Only Egotists or Fools Try to Pick Tops and Bottoms

• If a stock or a group of stocks are going up faster than the market, he will instruct his analysts to investigate them. Unless there is something seriously wrong with the fundamentals, he will buy them, and he will hold them until they start to lose relative strength.
• “Only egotists or fools try to pick tops and bottoms.”
• “Wait until the market tells you.”

Great Expectations For European Private Equity (But That’s Not The Way The World Works)

• If a deal sounds too good to be true, it probably is too good to be true.

Other Contrarian Indicators

• Sobel’s historical studies on the duration of recoveries also are inconclusive. He finds that after the Panic of 1837 it took until 1844 for the market to recover its composure, and it required six years after the Panic of 1873. The conventional wisdom is that following the Crash in 1929, it was 20 years before a new bull market began.

Ch. 11) From One Generation to Another - Bismarck and the Yale Endowment

Timberland For Children With Inherited Money

• To perceive the future chain of events that would be triggered by an action in the present is what successful investing still is all about.
• Bismarck was perfectly satisfied with this return, but always withdrew his profits and invested them in land and trees. He was convinced that investing in paper securities was a fine and quick way to get richer, but that the repository of true wealth should be land on which you could grow trees.
• Bismarck also worried that his descendants would not know what to do with an inherited investment portfolio composed of stocks and bonds that required informed buying and selling decision.
• Therefore, he liked the immutable, stable characteristics of owning timberland.
• However, single asset trusts can be dangerous.

Yale’s Endowment: From Bankrupt To Neglected To The Best

• The travails and triumphs of Yale endowment vividly demonstrate how hard it is to structure an investment organization that can adapt to the ebb and flow of investment talent over even a couple of generation. The message I derive is that that the main individual (or perhaps individuals) who run the portfolio is the absolutely crucial choice. A committee can’t do it. A committee can be instrumental in picking the individual, and hopefully it will make a wise choice, but it can’t get involved in actually managing the asset allocation of the portfolio. Their consensus wisdom is bound to be wrong.

Ch. 12) Nature’s Mysticism And Group Think Stinks

• The trick with the Fibonacci numbers and the stock market has always been in getting the starting point and the wave count right. There are waves within waves, so many Fibonacci disciples try to market themselves as short-term timers.

Fibonacci Numbers Are Powerful - But Too Mysterious For Analyzing Markets

• All investors by nature are conditioned by their memories. If they have only been investing for a short period of time and don’t have a lot of combat experience, they are particularly vulnerable to what has just happened to them. It is very important not to fall into the attractive trap of extrapolating the most recent past into the future.

Group Think = Groupstink and Solo Think: Investor Meetings Need A Little Agitation And Contention

• The collective intelligence of the group is surely less than the sum of its parts, and the more people on a committee, the less chance it has to be wise and crisp in its decision making.
• No guts, no glory.
• Decision making and responsibility has to be located in an individual.
• Just remember, search the parks in the world’s cities; there are no statues to committees.

Ch. 13) The Internet Bubble - I’d Still Rather Have Air-Conditioning

The Crowd Hooted

• There is an old Russian proverb that goes:
  Dwell on the past, and you will lose an eye.
  Ignore the past, and you will lose both of them.

The Next Bull Market: Africa And The Middle East

• The bank robber, Willie Sutton, appearing in court, was asked by the judge why he robbed banks. He replied simply, “Because that’s where the money is.”
• “Guerrillas cannot be integrated into the regular army without losing what is is that makes them effective.”

Ch. 14) Great Investment Managers Are Intense, Disciplined Maniacs

Don’t Hold On Blindly: Great Investors Cut Their Losses

• Bernard Baruch wrote:
  - “In the stock market the first loss is usually the smallest. One of the worst mistakes anyone can make is to hold on blindly and refuse to admit that his judgment has been wrong. Occasionally one is too close to a stock. In such cases the more one knows about a subject, the more likely one is to believe he can outwit the workings of supply and demand. Experts will step in where even fools fear to tread.”
  - “Many a novice will sell something he has a profit in to protect something in which he has a loss. (…) Actually the procedure one should follow is to sell the bad position and keep the good position.”
• Baruch wrote that one of his most important rules of investing was to “learn how to take your losses quickly and cleanly.”
• In Reminiscences of a Stock Operator by Edwin Lefevre, Jesse Livermore says over and over again that you should buy on a scale-up and sell on a scale-down. “Never make a second transaction in a stock,” he writes, “unless the first shows you a profit. Always sell what shows you a loss. Only suckers buy on declines.”
• Livermore was a dedicated believer in owning strong stocks that were in clearly defined, long-term up-trends. As soon as a stock he was long faltered, he got rid of it. His rule was that when a stock that had been strong failed to rally after a reaction, that was the first sign of trouble and time to get out.
• Of course, buying strength and selling weakness is pure momentum investing, and as a value investor and believer in the inherent efficacy of fundamental analysis, I disdain that style. So does Warren Buffett.
• Nevertheless, you have to be respectful of the knowledge of the market. (…) When a position declines by 10%, we force ourselves to do an extensive and systematic review of the fundamentals with both internal and external resources. We have to be sure nothing has changed. After the review, if nothing has changed except the price of the stock, we have to buy more. If we lack that conviction, we have to sell at least half of the position.

Visiles And Audiles And Disciplined Reading

• Charlie Munger said: “I have said that in my whole life, I have know no wise person over a broad subject matter area who didn’t read all the time - none, zero. (…) investment is a broad area.”
• I had the bad habit of wanting to reduce the load by discarding paper. I would end up putting aside the really good stuff to read later while I compulsively worked through the junk.
• The most productive reading time in my day is the 85 minutes on the commuter train.
• The average reduction of intelligence from e-mail interruptions was 10 IQ points compared to 4 points from smoking cannabis is the office. (…) The average IQ decline for women from e-mail addiction was 5 points whereas for men it was 15.

Ch. 15) You’re Only As Beloved As Your Most Recent Performance

Even Superstars Get Pushed Out

• All good investors have cold spells. Sandy was hard on her staff, but managing a large mutual fund is not supposed to be a popularity contest.

Ch. 16) Once You Have A Fortune, How Can You Hang On To It?

In An Apocalypse, Jewelry Works

• It’s hard for me to conceive of jewelry as a major asset class for serious money. However, as a repository for some wealth, like art, it makes sense for reasons beyond the aesthetic. For one thing, it can be easily given to daughters and daughters-in-law, skipping gift taxes, and when the matriarch dies, it can be quickly scooped up by the heirs, avoiding inheritance taxes.

Venture Capital Is Glamorous But Risky… but You Can Get A Wonderful Ride

• A recent study from Horsley-Bridges Partners, reports that betwwen 1990 and June 2003, $195 billion was invested in VC funds. Among all funds, those in the top 25% of performance had $20 billion committed to them and returned to investors $80 billion, presumably with more to come in the future. The rest of the investors in the VC industry, who plunked down $175 billion, have had no net return whatsoever, and in terms of cash on cash have lost 10%.

Select Hedge Funds With Skeptical Care

• Let’s say you are retired, have $25 million of financial assets, and a working familiarity with investing. You figure that you need an income after taxes of between $400,000 and $500,000 a year to live in the style you’re accustomed to, and you have $150,000 of other income from your pension, social security, and so forth. So you put $5 million into a portfolio of high-grade, medium-term tax exempts, which gives you roughly $225,000. I would buy $2 million ($85,000 of pretax income) of 10-year Treasury bonds as a strategic reserve. Then, with the remaining $18 million, I would buy $5 to $7 million of Vanguard index equity funds. The remaining $10 to $13 million should go to either 5 to10 hedge funds (if you can identify and follow that number) or a couple of funds of funds. The idea is bonds for income, equities for growth, and hedge funds for all seasons.

Ch. 17) Three Investment Religions - Growth, Value, and Agnostic

Identifying Growth Stocks Is Extremely Difficult

• Remember that you are buying stocks, not companies, and don’t fall in love. Sell growth stocks when they become outrageously expensive. Fall in love with people, children, and dogs, but not stocks.

Value Investors Love Ugly Companies

• Value stocks, by definition, are cheap in relation to their assets and earning power because investors are pessimistic about them. There is usually bad news associated with them, and since investors tend to be extrapolators, they assume the bad news will continue.

Growth or Value: Which Performs Better?

• The performance history of growth versus value is clear. Over a period of years, value beats the daylights out of growth, and small-cap value is by far the best of all.
• For IRAs(Individual retirement accounts) the Vanguard index funds make sense to me. (…) When the time comes and small value is cheap again, Vanguard has a Small-Cap Value Index Fund.
• It’s too dangerous for the amateur to pick individual stocks. As I mentioned earlier, history shows that the lifespan of growth stock is short, and the fall from grace when it comes can wipe out years of gains. As for mutual funds, their managers come and go, and the fees are high.
• The two biggest index fund firms by far are Vanguard and Fidelity.

Ch. 18) The Trouble With Being Big

Alpha Investing Is A Zero-Sum Game

• It’s ironic, but the more you want performance and push for it, the more difficult it is to get. It’s like playing a sport. The more confident you are, the better you play. A relaxed, obsessive investor is best.
• Buffett once said that the great thing about being an investor is that you’re like a batter in a baseball game in which there are no called strikes. They can throw you General Electric at 45, he said, and you don’t have to swing. They can throw you Microsoft at 28 and you don’t have to swing. They have to keep pitching and you don’t have to swing. So if you’re patient, the odds are with you. You can wait until you get a bog fat one right where you want it. You might not swing for six months; you might not swing for two years, but the odds of hitting is out of the park are a let better when the pitch is fat. You must be patient!

Ch. 19) Bubbles And The True Believer

Two Types of Bubbles: Bad And Very Bad

• There are two general varieties of bubbles. The first, as bubbles go, is less malignant; the other, pure cancer and very dangerous. The happier varieties are bubbles in the securities of productive assets like technology, railroads, and capital equipment underwritten by the financial markets, in other words, stocks and bonds. The bad kinds are in nonproductive assets like tulips, Tokyo golf courses (in 1990 membership in one Tokyo club sold for $5 million in yen-equivalent current dollars), real estate, or collectibles when the bubble’s assets are used as collateral for loans from banks.

The True Believer: Disciple Of Gold

• Owning some gold is a wonderful diversifier. Gold goes up when stocks and bonds go down. (…) my allocation to managed gold would be 5% to 7% of the absolute return portion.

Ch. 20) Divine Intervention, or Inside Information? - A Tale That Will Make Your Blood Run Cold

Ch. 21) John Maynard Keynes - Economist, Hedge-Fund Manager, And Fascinating character

• Robert Skidelsky’s three-volume biography John Maynard Keynes.

The Great Game And The Gambling Instinct

• The General Theory also included Keynes most brilliant stock market insight:It is not a case of choosing those which, to the best of one’s judgement, are really the prettiest, nor even those which opinion genuinely thinks the prettiest. We have reached the third degree, where we devote our intelligence to anticipating what average opinions expect the average opinion to be. And There are some, I believe, who practice the fourth, fifth and higher degrees.

Suffering (Personally And Financially) During The Late 1930s And WWII

• Keynes and White created the World Bank and the International Monetary Fund.

Conclusion

• Investing is much more an art than a science. Intelligence, experience, diligence, a knowledge of history, an open mind, and an obsessive nature are all important ingredients for the successful hedgehog.
• George Bernard Shaw put it: “Men are wise not in proportion to their experience, but to their capacity for experience.”
• To flourish, the professional has to relish and be invigorated by intellectual competition and be able to handle stress and adversity. It’s not a game for the fainthearted or for the intellectually lazy. Being obsessed and driven by greed is not sufficient; you want your money manager to truly love and be fascinated with the complexity of the game.