Value Library
The following is an
excerpt from the ABC Perspective - January 2002 - Pg. 4-5
Out of the Mouths of Babes
Our children are far more perceptive
and sensitized than we realize. They observe everything. They develop
their opinions of how things are and how they should be.
During the recent holiday period I
asked my three sons how they viewed their Dad's work. Naturally, they are
rarely up at 4 or 5 each morning when I have my investment quality time,
they don't observe me at my downtown office and they have no understanding
of the inherent stresses which an investment manager incessantly suffers.
Nonetheless, I asked each lad to draw one picture to represent his opinion
of Dad's work. I would like to share their thoughts.
Brandon, my 7-year-old drew a smiling
Dad working at his home office desk. Obviously I must put on a good face
and don't let on about the tribulations of work. Evidently my youngest son
perceives that I have a lot of fun at my work.
Ryan, my 10-year-old had a very
optimistic, hallucinative view. As a huge admirer of Bill Gates, he
believes anyone can become a billionaire. He feels that if you put your
mind to it you can easily make a billion dollars in the stock market. His
drawing of a happy man who just picked a stock and became an instantaneous
billionaire intrigued me. Ryan thinks the securities market is a
"piece of cake", much like the giddy investors during the high
tech rage of 1999-early 2000.
Harlan, my 11-year-old had a more
pessimistic view of Dad's work. I guess he had been listening to the
financial woes of Enron. He attempted a comical drawing of an investment
advisor informing his client of a bankrupt investment. Harlan's cynical
view is probably shared by the many high tech investors who were burned by
the recent bursting of the technology bubble.
My overall reaction to the three
drawings was one of intrigue and amusement. Kids have very definite
opinions of the investment business and the stock market. Clearly my
children view my job as "fun" and consider investment returns
as either the proverbial "horn of plenty" or a "dangerous
minefield". The industry, however, is not so black or white.
The fact is, the securities markets,
presently, are extremely volatile, treacherous and are testing the
mettle of even the most able of analysts and portfolio managers. The
perceptions of the business to both children and adults vary widely as
do investor experiences. This is quite normal.
But drawings of giddy billionaires
and freaked out bankrupt company investors are not commonplace in our
industry. That perception is fallacious. The truth lies somewhere in
between. Clearly, Ryan and Harlan's investment perceptions are at the
extreme and while these may be a correct sampling they do not represent
reality. On the contrary, investor discipline, patience and serious
financial analysis are more characteristic of the business and are key
ingredients to superior investment performance.
Irwin A. Michael, CFA
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