AND SOMETIMES NOT

Almost 60 years ago – at much too young an age — I was CEO of a public investment fund which had several directors (who were at that time about my age NOW– 89).

We had regular Board meetings to review where we had been and where we aimed to go. At one of those meetings there was a proposal on the agenda to make a small special investment. I supported the investment and asked our analyst – even younger than me – to present the proposal to the Board.

The young man made quite a good presentation and ended by emphasizing that “and it is great, we can get our money back in five years!”

At which point, one of our wizened and wise directors grumbled, “What do we want that for? We’ve got it now!”

Needless to say, the proposal failed—quickly–, and we moved on to the next topic.

I learned a bunch of things from that moment.

If you already ‘have’ the money, investing it to simply just get it back at some future date does NOT by itself make sense.

Sounds right, but the process of investing is not as simple as it may seem on the surface. The trade-offs are often not obvious or linear.

Investing is NOT purely a mathematical exercise. The goal – obviously? — is to make a series of investments that together over time increase in value and balance risk.

Since those days (Neanderthal it seems now in the simplicity of the financial instruments we had available then ), investing has been turned into an art form with all kinds of mathematical tricks.

At the end of the day what you do not say or do not DO is as, or more, important than what you DO.

BEWARE the Covid virus effect on our investing world!