Show Your Work

The hardest thing is sticking around. Surviving in the investing business, hell in any business, is a success in and of itself. Navigating the market, employees, customers and most importantly, yourself, is tough.

In the markets, greed and hubris are responsible for a lot of failures. Holding on too long. Risking too much. Trying to play catch up. Doubling down. All very common, but lethal, behaviors that routinely take down individual investors and professional money managers. At some point, every person experiences strong emotions. It’s those who don’t indulge them, but do the right thing who stay in business.

I remember receiving an email from Ed Seykota in response to the October-2015 monthly report I sent out. We lost over 10%. He said he wanted to commend me on sending it out on time. Losing money hurts, but losing respect is something else — especially to someone like Ed who I respect very much. Doing the right thing whether you’re making money or not is tough, but necessary to maintain a solid business.

It’s a beautiful thing where you can see someone’s uninterrupted work for very long periods of time. I personally know of a several funds dating back to 1981, 1988 and 1974. No breaks or time-outs. Just a continued process month after month after month. No sweeping those painful drawdowns under the rug. No avoiding them at investor meetings or cocktail parties. And is it any surprise that these three funds have posted some of the best returns in the industry over the past 35-40 years?

How many investment firms have continuous track records dating back to their inception? Not many. In the hedge fund business, a common practice is shuttering one fund after it’s had a rough period only to launch a new one with a different marketing spin. Melvin Capital, known for its recent large losses, is currently in the process of doing this exact thing (

I have a son on the way. Is this how I’d raise him? To hide his poor work? To only show me the good test scores? There is honor is showing all of your work. Few can do it. 



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