Don’t you get irritated when you meet a fund manager and all they tell you after a little bit of probing about their performance is how their poor performance is as a direct result of the difficult market conditions. The guy trading volatility breakouts is blaming the lack of volatility. The trend follower complains of no “follow through” and the option writer complains of implied volatility being too cheap relative to historical vols, and so on and on, just think of an excuse and you will no doubt hear it when it comes to poor performance. I should know I have done it myself.
If whinging irritates you then meeting managers who claim excellent performance as their own superior achievements must downright annoy you. Well if it isn’t old Noah, yes the guy who built an ark a few thousand years ago, who teaches us a fascinating lesson in how we interpret human accomplishment. Noah was given a task to save the world but he didn’t do the best job, in the end he only managed to save his family and the animals on earth, the rest all died in the flood. The Bible describes him as a righteous man, but then adds the famously debated words “in his generation (time)”. What importance can we learn from the added statement in his time, I saw a great insight by David Lapin; the debate that takes place with this extra statement on a superficial level is whether Noah was righteous because of his generation, i.e. if everyone is a baddy then being just a little good makes you look righteous. Or was he so great because he was righteous when everyone else was so bad.
We need to realize that talent is something we are born with, pretty people or clever people don’t create these superior attributes, they are genetic blessings. It is therefore encumbent on us to acknowledge the talents we are giving, only from that base does the Noah debate enter as to how great he was. A clever person needs to first recognize and acknowledge they have a gift, once they have done that then the question becomes how much effort did they put into harnessing that talent to achieve their results. It is this effort that forms the basis of whether we are judged to be righteous or in the case of the fund manager – talented and deserving. Market conditions come and go as do different generations of cultures that is not what we are debating.
Let’s take a practical look at the current market that looks set to go on to make new highs. From March 2009 when the Great Recession or Global Financial Crisis (GFC) put in its stock market bottom we have seen an almost relentless bull rally. Anyone who was and is blessed to run a fund with a long bias to the stock markets over this period has enjoyed a possible once in a liftetime liquidity present. The fund manager who acknowledges the absolute gift of being presented such a favourable market and through sheer determination, hard work, resilience, creative thinking and discipline has been able to outperform “in his time (read: competitors)” is the true definition ofgreat for all times!