By DAVID MOON, Moon Capital
January 20, 2008
A friend of mine recently proved that he is incredibly confident in both
himself and his marriage. He gave his wife a gym membership for Christmas.
She didn't hit
him, at least as far as I could tell. The neighbors didn't complain about late
night beatings or police calls.
What happened? She went to the gym.
She reported that the gym seemed crowded the week
immediately following Christmas, but since she was a newbie, maybe that was a
normal cardio congregation.
You can predict what happened. On January 2, the
place was bursting at the seams. She had to wait in line to get on one of those
machines that make you feel you're walking up stairs that don't go anywhere. Who
pays to work out on a machine that replicates a fire escape?
By January 12, she had almost the entire gym to
herself. She finally saw the gym in its normal state. The New Year's resolutions
had finally worn off.
It took less than two weeks.
The Shoney's sitting in the same parking lot as her
gym looked as full as ever. Breakfast buffet trumps weight-loss resolutions.
People say they care about long-term performance,
but how many follow through on those words?
A new client this week was concerned that the few
days that it would take to transfer his assets from his old manager to us would
cause him significant losses. He explained that he had lost ten percent in just
the last two weeks. If it takes another two weeks to get his assets moved he'll
have lost 20 percent.
Maybe. But only if the past is guaranteed to equal
the future. Using that logic, my weight would have continued to double every six
months, just like it did that first-half year after I was born. And I would
weigh 1.8 octillion pounds today. That's 928.5 trillion trillion tons, or enough
to scare the people at Shoney's and the Rush.
Someone else was skittish about the stock market and
his entire economic future. 'Aren't we heading into a recession or already in
one? I'm just not sure if I'll ever be able to retire.'
This guy graduated from college in the middle of a
recession in 1969. He has worked, saved and invested through six recessions, two
stock-market collapses, an oil embargo, a presidential resignation, Monica
Lewinski, and Peyton Manning being denied the Heisman. Yet the Dow Jones
Industrial Average managed to climb from 800 to 12,500 and this guy managed to
accumulate $2 million while working a fairly normal job.
All he did was keep focused on the long term.
Emotional states change. It sometimes becomes
difficult to keep the same rational understanding about things at all times.
Right after two or three weeks of gorging on fruitcake and eggnog it is easy to
make promises. It's like seeing an old classmate at a high school reunion. 'We
had such a great time. I just know we're going to stay in touch.'
Yeah, right. Pass the eggnog, please. And no, I'm
not about to use that treadmill. Go ahead; you can have it.
Oh yeah'and I promise I'm going to focus on
long-term performance, not the daily or weekly or even monthly returns of my
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).