Track

Why do folks find it hard to believe that I was the Linlithgow Academy athletic champion in fifth year back in 1965?  But because I was born in late February, thanks to the “rules of the game” for some reason or other I was barred from running and jumping against my own age group.

So at 15 I was deemed to be too old and forced to compete against “under-18s”.  And that’s not easy.  But inspired by Alf Tupper, the welder who trained by eating fish suppers before setting world mile records, (in The Rover) my Scotch pie diet fired me to success at 100 and 200 yard sprints.

It never crossed my mind to ask why it was that I could run like a whippet on heat yet be a breathless straggler after a couple of mile jog round Linlithgow Loch.  It took until 20 years ago before I discovered the reason, when as a member of TEC a group of like-minded business owners I met Tom McNab.

TEC groups met monthly and we had workshops with resource speakers to improve performance in fields as diverse as recruitment and marketing.  Leadership and coaching was what Tom covered in his 3 hour session.  And it was then that he explained some of us were born with a system that fired oxygen quickly into our muscles making us natural sprinters, while others had a slow burn system ideal for long distance events.

So who’s Tom McNab?  Born in Scotland in 1933 Tom’s gone on to be one of the world’s outstanding coaches.  He coached and mentored decathlete Daley Thompson (who struggled at distance running if you remember) to Olympic Golds.  And inspired Greg Rutherford to Long Jump Olympic Gold, as well as coaching teams from Rugby to Bobsleighing to outstanding achievements.

He also was Technical Adviser to “Chariots of Fire” which won four Oscars, has written award winning books and is still going strong now (in a coaching career spanning 6 decades) despite his opinion that he’s done for some sports what Quasimodo did for coat hangers.

He believes advisors and coaches complicate things too much thus justifying their existence and charges.  Tom preaches “encouragement,” “keeping it simple,” and like Sir Harry Lauder…. “keeping right on to the end of the road.”

Remembering what I learned that day 20 years ago came back to me when I saw a quote by former US President Dwight Eisenhower when asked about priorities.  He replied “I have two kinds of problems:  the urgent and the important.  The urgent however are not important, and the important are never urgent.”

A friend asked me the other day what was the hardest part of writing Letter From Linlithgow every month.  Well I replied “It’s about encouragement, keeping it simple; cutting through complications imposed by widely quoted “experts” and reminding clients not to confuse urgency with importance.”  It’s saying every month in different ways “ignore shock- horror, ever-changing headlines quoting gloomy experts.”

They have different goals from you.  And in pursuing their goals they spill out confusing, misleading and false information.  As Barry Ritholz says “All of this adds up to an information matrix that’s opaque, conflicted, confusing and expensive for investors.”  Fellow American Charlie Bilello explains it more graphically with his “Tolerance for Bullshit” graph.  You can imagine what that looks like.

So what are their latest headline worries creating fear and uncertainty?  How about “Sell In May and Go Away” and “Worries Build Over French Election Uncertainty.”  Remember last year’s “Brexit Wrecks It for Investors” and “Markets Plummet on Trump Shock?”  Wrong again … and again.

When I was contacted recently by the media and asked which funds should be sold before May came along “to avoid the impending market falls,” I reminded the journalist that in 12 of the last 16 years investors would have lost out selling up in May.  My words didn’t appear anywhere.  Wonder why?

You may also have noticed “experts” claiming “Leading Indicators have an excellent record of predicting stockmarket crashes.”  The end is nigh they say.  Well they say it every year don’t they?  But let’s study these indicators instead of just taking their word for it.

History shows there have been 15 Bear Markets since World War 2 (falls of around 20% or more in the US and elsewhere).  Studying the 5 indicators quoted by these doomsayers, two Valuation systems of Price and Earnings, Treasury Yields, Dividend Yields and Inflation Rates, there’s absolutely no pattern to be discerned.  None.  Nada.

Now we’re assured by the same “experts” that the US Federal Reserve’s rising interest rates WILL bring share prices crashing down, especially in Emerging Markets.  No evidence over the last 20 years supporting that.   None.   Nada.  But facts don’t matter to these folk.  They’ll print the story anyway.   As Simon and Garfunkel remind us… “All lies and jests….still a man hears what he wants to hear and disregards the rest.”

What I’ve learned over the last 44 years is that the one thing that makes the real difference to building wealth successfully without stress is to limit the downside when stockmarkets do fall heavily as they’ve done 15 times in the last seventy odd years.  If you track an index which falls 50%, as happened twice in 17 years, you need 100% growth to get back to where you were.  Not good.

Which is why we ignore headlines, follow Ned Davis Research, read widely, like Warren Buffett, and have a defence based income driven investment philosophy.  Joe Kalish of Ned Davis has an enviable record of spotting economic woes early.  He saw the 2008 storm before it blew up.  In an email exchange with Joe last week he reports no inclement weather brewing.  That’s not to say it might rain later this year though.  Could do with some.

In athletics it’s the sprinters who hog the headlines not the long distance runners. But in life and investments it’s the marathon experts who win.  They’re the ones who recognise you need to go through pain barriers for long haul success, ignoring the best efforts of the pack to disrupt their plans.

So my message this month is don’t pay any attention to the latest headlines and the actions of the pack.  Next month they’ll find new worries or fads anyway.  Headline writers love turning wee dramas into a crisis.  Everything’s urgent to them.  But not important to you.  I wonder what Tom McNab would advise?

alan-steel
Author
Alan Steel
Chairman
This letter is the personal view of Alan Steel. Please check the appropriateness to your individual position with your advisor before taking or refraining from any action.

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