Tales of McGurvey.
Capital Growth Topics #312: McGurvey
McGurvey--a pseudonym for a hedge fund operator and advisor of my
acquaintance--has fallen upon hard times. Once again his bearishness
has gotten ahead of the market. I note the steady arrival of
cautious/bearish comment from a fellow whose work is bullish but
whose opinion is bearish.
Late last year McGurvey developed an opinion about how things were
going to play out this year. That opinion was based on how McGurvey
expected his analytical work to behave. However, the market fooled
him and instead of turning bearish as he expected, his work--horror of
horrors--turned bullish. But he is unable to change his opinion; it
seems that his work is more flexible than he is.
Now it may turn out that he is right, or it may turn out that he is
wrong. Whatever the case, his plight is an object lesson--the market
is always right. I recall some years ago McGurvey got bearish on a
stock and tried to argue it down to zero for a couple of years. He
ranted, he raved, he pounded the table, he brought in experts, he
consulted the competition, he did extensive research. But that stock
paid no attention whatsoever and went on to become one of the
biggest winners of all time.
One of the harshest lessons the market has to offer is humility. It is
quite simple. The market is right, 100% of the time, and unless you are
one with the market you are wrong. Arguing with the market is simply
wrong, 100% of the time. This is a lesson McGurvey intellectually
knows, but emotionally cannot cope with. We are all anxious to
achieve wealth via the market. To do so one must be one with the
market, not at odds with it. McGurvey will never learn. He'll go on
arguing with the market and sowing the seeds of his own destruction
until the market finally breaks him.
John Bollinger, CFA, CMT
11 February 2000
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