Dis and Dat - Gathering Together - October 2010
Gathering together
“For man, autumn is a time of harvest, of gathering together. For nature, it is a time of sewing, of scattering abroad” Edwin Ray Teel
Cool weather brings thoughts of the World Series, football games, and deer hunting. These are fall events that are usually shared with family and friends. Below, we are bringing the conclusion to our interpretation of how John Wooden’s pyramid of success may be used in investing.
I will begin with what John Wooden described as the heart of his pyramid, the four boxes in the middle. Regarding conditioning, or what he calls the character block of his pyramid, consist of a mental, moral, and physical focus on being able to last. It includes the thought you must take care of yourself and not do things that are harmful, because this may affect your judgments. Consider that in investing a bull market in your area may get you good returns over short period of time, yet a constant search for value, usually helps over the long-term performance. Once that “bull market” turns to a “bear market” it may also lead to significant loss if too much of one’s portfolio is in a single security.
Regarding team spirit, John Wooden suggests considering the negative effects of short term selfishness. This can seem at odds at times with condition. Yet, there is a difference between the beating up of others versus raising up yourself through preparedness. Teams in life and finances are not as easily definable as in organized sports. They do not all wear the same shirts while opponents wear different shirts. The team of investing may include all of stakeholders of the company, such as employees, management, lenders, stockholders, government, and consumers. It is important that everyone seeks value to keep it in order. Personally, you may have various team mates in your advisor, tax preparer, insurance agent, estate attorney, beneficiaries, et cetera. The next block is described as skill. It includes things such as continual learning, seeking the truth, seeking wisdom, seeking knowledge. Various get rich schemes play on our lazy side. They suggest all you have to do is send in $29.95 and then you have success. We know in real life value changes and we must work hard to stay on top of it. We have found such skills as being able to analyze financial statements, going contrary to public opinion in frenzies are also valuable skills, which need constant improving.
The fourth tier reflects two character traits to consider instead of the many short-term distractions, such as winning, or losing in sports; or recessions, booms, fear, and greed, in investing. First block here refers to poise. This requires the courage to be one's self, to stick to your objectives or principles no matter what the crowd suggests are glittering at the time. We believe the current “glittering” distractions are coming from the areas of long-term bonds and gold to name a couple. The next block suggests confidence is needed before reaching the apex. While you can listen to the promotional gurus try to talk you into the next big thing, it will take confidence in your strategy to prevent you from taking detrimental action.
The apex is Wooden’s competitive greatness. Wooden describes this position as the ability to perform at your best when it is needed… and it is needed every day. Some years, your investments and finances will not live up to your expectations, and in other years, they will exceed them. Regardless of which season we found ourselves, our objective should be “competitive greatness”. We believe Wooden knows that just as the seasons change, so do the markets, family, and friends. We hope you have some time this fall to get to know each a little better, and that enriches your life.
See you next time.
James Pope
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