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From: "GWENAEL GAUTIER, CAISSE DES DEPOTS ET" <GGAUTIER@xxxxxxxxxxxxx>
Subject: (BN ) Soros, Buffett and Robertson and Aging: Michael Lewis
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Soros, Buffett and Robertson and Aging: Michael Lewis (Correct)
5/4/0 10:48 (New York)
Soros, Buffett and Robertson and Aging: Michael Lewis (Correct)
(Adds dropped character in 8th paragraph.)
(Commentary. Michael Lewis, the author of ``Liar's Poker''
and ``The New New Thing,'' is a columnist for Bloomberg News. The
opinions expressed are his own.)
New York, May 4 (Bloomberg) -- You could make a slim book
from the collected public statements over the past few weeks by
George Soros, Warren Buffett, and Julian Robertson. Anyone who
sits down and reads these will notice a common theme. Or, rather,
a pair of related themes.
The first and most obvious of these is the role played by the
stocks of new technology companies in the demise of the three
greatest investors of the modern Wall Street era.
Soros, the world's biggest hedge fund manager, saw his
Quantum fund plunge 25 percent from March 24 through April because
it bet on tech stocks when it shouldn't have. Shares of Buffett's
holding company, Berkshire Hathaway Inc., have declined 27 percent
in the past year, and Robertson's Tiger funds fell 13 percent this
year through February after dropping 19 percent last year, all
because they didn't bet on tech stocks when they should have.
Maybe more to the point, none of the investors fully accepts
that he, and not the market, has made some mistake. Buffett argues
that the market is mad. Soros says that the market has become too
risky. (Soros!) Robertson might as well have been speaking for all
three men when he writes, in his farewell letter to his
shareholders, that ``there is no point in subjecting investors to
risk in a market which I frankly do not understand.''
Which brings us to a second and related theme in the thoughts
of three of the world's most famous investors: how old they sound!
Re-read their public statements and you hear a familiar voice. It
is the voice of an old man who disapproves, or fails to
understand, what kids these days are getting up to.
The Age Factor
Of course, the world's greatest investors are old men. Soros
and Buffett are both 69; Robertson is 67. Even the two younger men
to whom Soros had delegated the responsibility for investment
decisions -- Nicholas Roditi and Stanley Druckenmiller -- are no
spring chickens. Roditi is 54 and Druckenmiller is 46.
Is there, perhaps, a connection to be made here? Could the
investment problems of Soros, Buffett and Robertson be that they
are old men?
It wouldn't be surprising if it were. Even in normal times
there is probably a slight tendency for investors to hang around
longer than they should. The investment business is a past-haunted
enterprise. People with money tend to entrust it to investors with
track records; investors with long track records tend to be people
who have been around for awhile, for no better reason than that
they have been around for awhile.
This general tendency for the market to indulge investors who
are perhaps slightly past their prime is right now more glaring
than ever. Since late 1995, when Netscape Communications Corp.
signaled the start of the Internet revolution, a lot of shockingly
young people have seized economic power. In the process, a glaring
generation gap has opened up, between the investment legends of
yore and the entrepreneurs currently re-making the U.S. economy.
Value of Experience
Druckenmiller -- the only legend who even made a stab at
playing the new game -- has been seeking to evaluate and
capitalize on the activity of people 20 years younger than
himself.
There's no point in pretending that age does not matter on
Wall Street. Old people are different than young people in many
ways. One is the value they attach to experience. It's hard to say
why old people place so much more value on experience than young
people do. Maybe experience is as valuable as they say it is. Or
maybe experience is merely the one commodity in whose market old
people enjoy a monopoly.
In any case, a person who has a great deal of experience,
especially one who is vain about his experience, longs to say
``I've seen this before, or some version of this, and therefore I
know how it will end.'' Faced with something genuinely new he is
less likely to say, ``I've never seen anything like this before. I
need to adapt.''
The Aging Process
No doubt there are many old people who defy the physiology of
aging, and who preserve a child-like gift for learning knew
skills, thinking new thoughts and seeking new experiences. No
doubt there are many older people who resist the most crippling
psychological trait of the aged: self-importance. But I doubt
you'll find such people working on Wall Street. On Wall Street,
men age like dogs.
In any case, the counter-intuitive truth of the past few
years is that people with no experience have had an edge in the
investment business. It's no accident that the best thing you
could have done with money since late 1994 is to have handed it
over to any 28-year-old who happened to work in venture capital.
True, the 28-year-old had no respect for the rules of finance
-- what goes up must come down, if it looks too good to be true it
probably is, etc., etc. That ignorance was the source of his edge.
The trick for him will be the trick every investor faces, once he
has made his name: He must avoid drawing the wrong lessons from
his experience.
--Michael Lewis through the New York newsroom at
mlewis1@xxxxxxxxxxxxx or (212) 318-2300./cws
Story illustration: To graph a comparison of the performance of
Berkshire Hathaway shares, the Quantum Fund, and the Nasdaq
Composite Index over the past year, enter or click on:
{CCMP <Index> COMP D <GO>}, then enter BRK/A US <Equity> in space
2, and QUTQTAI OS <Equity> in space 3.
Company news:
BRK/A US <Equity> CN
QUTQTAI OS <Equity> CN
8754Z US <Equity> CN
Company news:
NI HEDGE
NI TOP
NI WIN
NI US
NI NE
NI NY
NI LEWIS
NI COLUMNISTS
-0- (BN ) May/04/2000 10:48
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