A Father’s Day Lesson in Life – and Investing
On a Stormy Lake Michigan Day 47 Years Ago, My Father Taught me a Powerful Philosophy
As the rest of the investment world frets about the turmoil in Washington, the fate of tax reform, and the growing threat of North Korea, I thought we’d take a little trip back in time this month for a more evergreen piece of wisdom.
With the warm winds of June comes an important Sunday known as Fathers Day.
My dad turned 99 years old last month and I will hopefully be fortunate enough to celebrate another Fathers Day with him this year.
We won’t be able to do what we used to do to celebrate, which is what many father and son do to pass the time in Sturgeon Bay, WI – fishing. Up until a few years ago, dad was still game. But time has made that an unrealistic activity to share anymore.
Fishing can teach a man plenty of practical lessons about life – and about investing. In an age of rapid-fire news and computer programmed trading – a small dose of practicality can go a long way.
Which brings me to a lesson I learned in blazing color, many years ago on Lake Michigan, fishing with my Dad.
My father was militant about being “on the lake” by sun up. After all “real” fisherman did their fishing in the early dawn hours – when the fish were biting. Whether there is any scientific evidence to back this up, I don’t know. But that’s what Dad always said – so that’s the way we did it.
Yours Truly circa 1970: Lesson learned and a whole mess of perch!
We were rigged for Walleye that day – the most prized table fish of the great lakes. If you grew up on Lake Michigan, there was nothing better than coming home with a cooler full of Walleye. Fried up with a lemon and dash of salt and pepper, there are few things more pleasing to the Midwest pallet. Walleye can also reach a considerable size in the great lakes, making them a trophy sought by many an ambitious angler.
We were after the whoppers.
After about 3 hours, the rain was starting to come down pretty steady. Without saying a word, dad began pulling up his lines and securing gear on deck. “Reel in” he instructed me.
The Weather Started Getting Rough
But the weather wasn’t cooperating that day. It was a blustery Spring morning with a considerable chop on the water. The sky was overcast. Every once in a while, we’d catch a few raindrops blown against our face.
My father was not discouraged. We’d planned this fishing day all week – we were coming home with our Walleye – rain or shine. It was obvious that many other anglers from our town shared this ambition as a literal regatta of other fishing boats surrounded our location, all after the same prize.
The Walleye: Prized trophy (and meal) of Great Lakes anglers.
I was not so sure. The wind was making it hard to keep the rods steady, let alone feel any action. The constant rocking of the waves was making me a little queasy. And we hadn’t had a bite all morning.
We tried switching baits. No luck. We tried changing depths – going on top, back to bottom. All quiet. Dad even tried an old spin bait from his tackle box. Crickets.
After about 3 hours, the rain was starting to come down pretty steady.
Without saying a word, dad began pulling up his lines and securing gear on deck.
“Reel in” he instructed me.
“Are we headed in?” I asked.
“Nope” he flatly responded.
“Then what are we doing?”
“We’ll just have to take what the lake wants to give us today.” He said.
And with that, he headed towards shore.
A Change in Plan
Thankful to be out of the open lake, I watched as my father steered the boat into the calmer waters of the bay, and closer to home.
We stopped in a quiet spot somewhat protected from the wind. By the time we arrived, the clouds had started to break, and the day seemed to get a bit brighter.
“We’ll rig for perch,” said my father and began to reconfigure my fishing line to accommodate a smaller fish.
Perch did not enjoy the elite gamefish status of the elusive Walleye. They were smaller, more numerous, and easier to catch. But as a meal, they were almost equal to that of the Walleye. You just needed more of them.
We dropped lines and almost immediately got action.
I pulled up a 9 inch fish, right out of the gate. In the time it took me to unhook it and throw it in the cooler, Dad caught two more.
We ended up having a ball on the lake that day. We also ended up catching enough perch to make a feast for the whole family – and another the next day.
And I’d ended up learning one of the most important lessons I’d ever learned – not only about fishing but about investing.
The Lesson Learned
Fast forward 45 some odd years later.
Crazed tech traders bid Amazon and Facebook to ever more dizzying heights. Frenzied TV talking heads rave about the next hot IPO. On the commodities side, breathless analyst pontificate about the recent OPEC production cut talk, and the “tremendous upside” the oil market might have.
These guys are all chasing monster Walleye.
And they are surrounded by an armada of boats – many piloted by individual investors all after the same elusive trophy fish.
A few will catch one.
Most will not. Most will go home empty handed- with lighter wallets.
Few will learn to take what the market wants to give that day. They want to take what isn’t there.
Call it what you will – hunting bear, taking a flyer, swinging for the fence. Going after home runs usually means a lot of strikeouts. And even if you hit one now and then, the psychological, as well as financial consequences of striking out a lot, can pile up over time.
“Swinging for the fence” can also mean a lot of strikeouts – the consequences of which can pile up over time for an investor.
I’ll watch the new tech guru rave about his upcoming IPO with as much interest as anyone. I’ll listen as the oil bull or the gold bug talk about the coming surge or “explosive upside” of these markets.
But you want me to bet money on that?
Not a chance.
Taking Home YOUR Basket of Perch
Why should I risk hard earned money on events that have a considerable chance of never happening? Swinging for the fence or trying to catch a Walleye can be fun when it’s a game or past time. But when money is on the line, I’ll take the bucket full of perch all day long.
You see, you don’t have to try to wrestle a Walleye away from the market. The market offers you baskets of perch every day.
If you’re new to this newsletter, these perch are called options, and they expire about 80% of the time. If you’re writing them, you’re bagging perch. Sure you won’t get the glamour of the guy who hits it just right (a very few will) and brings home the monster Walleye. But you’ll have a very high probability of coming home with a cooler full of fish.
You take what the market wants to give you. And if the market wants to give me a basket full of little fish – and I never have to try to guess where the next big thing will be, I’ll take it – every day of the week.
Happy Fathers Day to all of you fathers. May the wisdom you pass down to your children and grandchildren be as valuable as that which was passed down to me.
Have a great month of option selling!