A Page From Running Money: A Peek Behind the Scenes of the Industry
I’m reading Running Money by Andy Kessler. It’s a book about the hedge fund industry and how Andy navigated the waters of this chaotic world. I’m only 50 pages in to it, but I’ve already come across what I think will be my favorite page.
Andy spent some time while at an H&Q Tech Conference asking the investment professionals in attendance, “How do you invest?” Here are the answers he received.
“We are business momentum investors.”
“We look for earnings surprises.”
“Growth at a reasonable price.”
“Trailing 12-month earnings multiple.”
“There are no great companies, only great stocks. Don’t ever forget that.”
“I like to focus on margins.”
“I only look at one thing, and that’s management. A lousy management team can run the greatest company in the greatest industry into the toilet. And a great management team can profit selling ice cubes to Eskimos. When I find a great team, I stick with them forever.”
“I just watch interest rates. When they go down, I buy stocks.”
“Currency rates tell you everything you need to know.”
“The second derivative of the change in industrial production numbers.”
“Marginal flows into gold.”
“I check the difference between personal income and consumer credit until it flashes bullish.”
“Jobless claims lead interest rates, which lead consumer cyclicals. Nuff said.”
“It all works on the Greater Fool theory.”
The most honest: “We’re indexed.”
Did you catch that last one? Yes, Andy cuts through the clutter and declares that the most honest of the lot are those that index. Exchange traded funds anyone!?