Style Agnosticism

I got into a conversation behind the scenes with a very well-known and talented chartist about a chart I made recently and I was told that it was essentially “Tourist Technician” in its simplicity.

Which made me smile.

Because while I love nothing more than to borrow the most helpful and prescient aspects of all the major securities analysis religions, the one thing I’ll never do is join one.

The greatest stock market investor of all time, Peter Lynch, had a nickname – The Chameleon. This is because no matter what was going on in the market he was able to adapt what he was doing to triumph. Lynch averaged – averaged – 29% annually for 13 years. No one else even comes close, every other manager in history is playing a different sport entirely.

If flexibility is an investing virtue, then Lynch is its patron saint. I am certain he had a great grasp on the core tenets of everything from Graham & Dodd to Growth At A Reasonable Price. And I’m sure he knew exactly when to accentuate the influence of one over the other depending on what was working.

I have great respect from those who’ve dedicated themselves to a given discipline, be it momentum or deep value, fundamentally-oriented or technically inclined. I’ll say for posterity that there is more than one way to skin a cat, and then I’ll tell you that I have no interest in initiating myself in the dogmatic rulebook that any of you pray to. Because I already know that nothing works more than a third of the time.

The great practitioners of these styles know this as well, and they expect to make a killing during the period in which the market regime favors their skills.  Witness the value player who accepts the inevitability that he will have to be patient, witness the acceptance by the momo trader that some environments offer more false breakouts than actual follow-through. The rest are all fooling themselves.

And to cap off this talk (and it was a good talk, thanks for coming) I’d like to share two quotes from two of the most successful market particpants of the last century:

“The only sound reason for my buying a stock is that it is rising in price.” — Nicholas Darvas

“The dumbest reason in the world to buy a stock is because it’s going up.” — Warren Buffett

If that doesn’t sum up the value investor / momentum investor in a nutshell, I don’t know what does.

These two quotes (and hundreds of others) appear in the prolific author Mark Skousen’s new book Maxims of Wall Street.

Apparently Buffet himself is a fan of these timeless (if contradictory) maxims. His note to the author here:

“Loved your great little book. In fact, I plan to shamelessly steal some of the lines.” –Warren Buffett

Expertise in a given investment style is great. Being doctrinaire about that style to the exclusion of all other wisdom is the fastest route to beclownment.

Check out Mark’s book at Amazon:

Maxims of Wall Street: A Compendium of Financial Adages, Ancient Proverbs, and Worldly Wisdom

Read Also:

Good Luck With That.  (TRB)

Lessons from Nicholas Darvas (The Kirk Report)