What Wall Street Can Learn From A Man Who Sells Apples
The drive from Richmond to Sweet Briar College is one of the simple pleasures of my life. I drive to Charlottesville, and then turn south on Route 29 and head through Virginia's wine country. I always stop at The Apple Shed and buy a basket of apples on my way. This last trip, I got to meet proprietor Russ Simpson and traded him a copy of The Naked Portfolio Manager for a basket of sweet Fuji apples.
Interestingly, Russ has a degree in criminology, but he's been in the apple business his whole life. We had a fascinating conversation about the variables that make great apples, things like rainfall, soil, and pruning techniques. He prides himself on knowing everything about apples. Yet I told him I thought the students at Sweet Briar who I was about to see could create a model that predicts apple quality better than he. I think Russ was stunned to hear that!As I explained, we could take everything Russ knows about apples and translate it into a set of rules. We could then test those rules using empirical data. I told him testing might very well prove that some of the things he believed were important to growing great apples, might actually not be important at all.
Russ showed an incredible amount of humility and self-awareness when he said to me, " You know, you might actually be right about that." Very few Wall Street portfolio managers have Russ's wisdom or modesty. Many buy stocks based on what they "like" without ever "testing" if what they like actually makes more money for their clients than random selection.
So the next time you chomp down on an apple, think about how rules-based a.k.a. "naked" investing can make life so much sweeter!
1 Comments:
Taking the emotion out of just about any aspect of your finances is bound to improve.
We need to be guided by our heads in these matters, not our hearts.
Emotional decisions with repsect to finances is probably what got a lot of us in trouble in the first place.
Good post
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