Over the coming weeks, members of The Value Perspective team will be travelling round the UK, visiting 10 cities to speak to audiences of professional investors as part of the 2018 Joint Investment Forum.
This annual event is known for short as ‘JIF’, which may be why, working on our presentation one day, the opening words of Rudyard Kipling’s famous poem sprang to mind: “If you can keep your head …”
On rereading the whole of If, perhaps the biggest surprise is that we have never mentioned it on The Value Perspective before.
For while Kipling may have penned the poem in 1895, almost four decades before Ben Graham and David Dodd co-wrote Security Analysis – the book that laid the intellectual foundations for value investing – many of its sentiments read as a check-list for followers of the strategy.
Echoes value investor behaviours
Right from the start (If you can keep your head when all about you are losing theirs), the poem is highlighting the importance of clarity of thought – of not being swept up in emotion and group-think – while the next exhortation (If you can trust yourself when all men doubt you) can easily be seen as encouragement for the contrarian approach to life all value investors need to be happy to adopt.
Among the sound general advice in the rest of If’s first verse, there are references to two further value virtues – the importance of patience (If you can wait and not be tired by waiting) and humility (And yet don’t look too good, nor talk too wise).
After all, the moment any investor thinks they know it all or grows too complacent after a particular success, they are asking for trouble.
Keep your head
In the second verse, Kipling makes his second – classic – call to keep a level head and steer clear of complacency (If you can meet with Triumph and Disaster and treat those two impostors just the same).
As we wrote in our Alternative tips for new (and old) investors, by no means all of your investment ideas are going to be winners so you had better get used to that idea.
Not that we are suggesting the whole of If should be taken as a rhyming manual for value investors – for example, Kipling’s view on a carefree approach to gain (If you can make one heap of all your winnings and risk it on one turn of pitch-and-toss) does not sit very easily with us.
While taking on considered risk may be essential for investors, adopting a portfolio approach should mean you are well past betting or speculation.
Face up to losses
And while we appreciate what Kipling was driving at with regard to stoicism (And never breathe a word about your loss), here on The Value Perspective – as we showed in The investment decision that haunts us most – we are as comfortable as anyone can be discussing unsuccessful investments.
For while no investor likes talking about their losses, it is important to face up to them – and the reasons they may have occurred.
All in all, however, If is a poem every value investor would do well to have pinned to a wall somewhere – though we will not be offended in the slightest if you prefer not to add in our own distortion of the master’s final words: “If you can fill the unforgiving minute, with sixty seconds’ worth of rational thought, yours is the Market and everything that’s in it and – which is more – you’ll be a Value Sort!”
If – by Rudyard Kipling
If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:
If you can dream – and not make dreams your master;
If you can think – and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ’em up with worn-out tools:
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’
If you can talk with crowds and keep your virtue,
Or walk with Kings – nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And – which is more – you’ll be a Man, my son!