CW on RM: The Wisdom Found in 'What if'

The Wisdom Found in 'What if'
08/25/2006 1:19 PM

What if I go fly fishing and camping in the mountains of southern Colorado next week and never come back to New York City? What if I could just let go of all the stress and pressures that come with running a fund in public to boot?

I'd have thought going to cash and subsequently being pleasantly surprised by a market collapse would alleviate some of the constant stress that comes with running other people's money. I'd have thought catching a big move in my Microsoft calls and further distancing myself from the market would help that omnipresent stomach knot that I whine about sometimes in these pages. I'd have thought that taking a break from being mostly aggressive in the market for the last 3 1/2 years of running this fund would have made this summer less stressful than last summer was.

And you know, I suppose that's all true to some extent. As I've outlined before, the pain that comes with persevering through the drawdowns -- especially big ones like I had last summer -- is brutal and horrifying. And I'm not brutalized (well, by some of my readers I am, but what's new there?) or horrified this summer.

But it's still stressful, isn't it? What if the market takes off while I'm still mostly in cash and Mister Softee? What if Mister Softee blows up? What if I start putting some money to work and immediately get crushed?

It reminds me of that ol' Marvel Comics series that I loved as a kid, What If, although it explored past events for characters, such as Captain America winning the 1980 presidential election.

I often think of that series when I write my "What's on My Mind" pieces on Friday afternoons, such as when I recently wondered what the setup would look like if Greenspan were still Fed chairman instead of Ben Bernanke.

We as investors always need to ask ourselves "what if." That analysis helps us determine our own risk/reward and can give perspective, such as the differences between Greenie and Ben.

It's an important tool, and while I wish that asking "what if" didn't stress me out like it does, I will, unfortunately, be asking myself that question constantly next week. I hope to have some new answers when I get back.

See you Sept 5.