Invest Like the Beatles
- Joshua M Brown
- October 13th, 2009
The Beatles have just released a box set, containing each of their albums digitally remastered. That their music stands up so magnificently some four decades later is remarkable and I believe that there are lessons in this legacy for investors that we'll explore below.
What made The Beatles so enduring was not just the talent of the band's individual members, but the band members' very individualism itself. I feel that as market participants, we should learn from the idiosyncrasies of the Fab Four and hope that maybe, just maybe, these lessons will combine to form an investment skill set that can also stand the test of time.
The Virtues of Paul McCartney, the Congenial Beatle
Paul was the one you could bring home to Mom, the one with the good-natured persona on camera and off. Being amiable is important if you expect to ever really learn anything worthwhile in the markets. A great deal of my own trading knowledge has come from asking questions of those with more experience or expertise.
To expect a veteran to spend time and energy working with you, you must first show the interest, jocularity and openness to signal your worthiness as a pupil. There are no shortage of kids right out of school who wish to learn a trade on The Street, but how many of them demonstrate the prerequisite congeniality and willingness necessary to be molded into a professional?
The Virtues of George Harrison, the Serene Beatle
For someone whose later years were so plagued with home intruders and repeated bouts with illness, the bulk of George's life away from the public eye was relatively calm and introverted. His quest for a more enlightened and spiritual existence led to a deeper and more sophisticated journey for the band's music than you would've imagined possible based on their earlier I Wanna Hold Your Hand repertoire. George eschewed the spotlight, quietly searching for something more meaningful while still "playing the game" with the boys when duty called. Investors, especially professional ones, should consider doing so as well.
Serenity, when one is away from the trading screen, keeps the dollar amounts at stake in perspective and allows the trader time to reflect on what he could be doing differently so as to improve the results of the next session. Stepping back, rising above the noise and innoculating one's self from the flashing lights and streaming headlines is the key to getting the big stuff right - and to being able to "play the game" when necessary.
George's search for deeper meaning in life should be echoed in our daily search for deeper meaning in what the market is trying to tell us. He wrote and sang some of the Beatles' best songs, but spent the majority of the time content with being in the background, enabling him to follow the lead of his more high profile bandmates. Finding truth in the markets and knowing when to follow the big talent and money are key lessons we can learn from George.
The Virtues of John Lennon, the Revolutionary Beatle
They say that most men of genius are also plagued with emotional instability and demons that keep them pushing the envelope well past the point where pushing would be advisable. If this is true, then god bless whatever inner turmoil pushed John Lennon, who was considered to be the band's driving creative force and prime agent of change. John's intensity and creativity could be adapted by investors in a variety of ways to give them an edge over those who stick to the market orthodoxy and at all times adhere to the playbook.
For starters, take some of those universal truths that most market players have learned as gospel, like the relationships between interest rates, commodities, oil prices, equity performance, currencies and bond yields. 2008 took many of the widely-accepted corollaries that would normally apply to these nuts and bolts and turned them on their heads. John's visionary ability to incorporate diverse rhythms, sounds, styles and cadences into an aural package that made sense in spite of - or even because of- its inherent eclecticism would be an ability to covet in this particular investing climate.
As for the "creative destruction" currently being experienced by almost all of our bedrock industries, from advertising to banking to publishing to manufacturing, I would imagine that John would gleefully embrace that creative destruction and, more importantly, would find a way to graduate to whatever came next while having a hand in its very assembly. Contrarian investors like Wilbur Ross have correctly done this through various cycles, culling the future of an industry like coal or steel from the ashes of that industry's prior incarnation.
The Virtues of Ringo Starr, the Dependable Beatle
Ringo has spent the past few decades enduring barbs and stings (mainly in jest) for his supposed lack of brilliance when compared to his bandmates. But what his critics are overlooking is that Ringo was the core that held the whole vortex of iconoclasm and experimentation together. Being consistent as an investor is probably the most important takeaway I can cite here, whether that be consistency in risk management, in data analysis or in position concentration. The top investors in history frequently mention the importance of maintaining discipline, and discipline itself comes from consistency. Not every trade is a life-changing winner and not every song is Yesterday or Eleanor Rigby. With discipline, many trades are just steps along the journey, the fiscal equivalent of Starr's Octopus's Garden.
Say what you will about Ringo's simplified drumming technique when compared to that of his contemporaries (Keith Moon of The Who, John Bonham of Led Zeppelin) but remember that it is Ringo who is still standing. It should also be noted that anywhere there was supposed to be the kick of the bass drum or the snap of a snare, it was there - on every song of every album and at every live performance. Ringo quite literally never missed a beat. Keeping it simple allowed Ringo to maintain the tempo and to get the big picture right. Traders who are aware of the market's tempo and who stay constant in the midst of volatility and madness will more often than not come out ahead of their more easily rattled peers.
The Virtues of George Martin, the Pioneering Producer
George Martin was never officially one of the Beatles, but in some ways, he was more responsible for their careers and achievements than they were themselves. Not only was he the producer of every single one of their albums, he actually signed the band in 1962 when no one else was interested. This is akin on Wall Street to discovering a monumental investment opportunity that others have passed over.
Working closely with the boys, Martin both evolved with and embraced each wave of technological innovation, becoming the most important producer in the history of popular music. The studio wizardry of George Martin is what kept the Beatles sounding fresh and ahead of their peers on each successive record. Utilizing technology is yet another ability that separates great investors from the pack. Accessing and understanding the latest analytical tools gives the modern trader a quantifiable edge when he incorporates them into a sound strategy.
Martin employed many tricks in the studio, from the addition of synthesizers and sound effects to making one instrument sound like another, to running vocal tracks backwards. Even with this extensive bag of tricks at his disposal, Martin's final production always seemed to contain just enough bells and whistles, never adding more than what was necessary to paint the sonic landscape against which his band would take the foreground. Restraint can come in handy in the markets as well. As data comes flying at us a mile a minute now, to compete, one must know what he should be paying attention to and what information is to be dismissed from consideration. Filtering the economic noise is every bit as important as anticipating or reacting to it.
The sum of the Beatle's parts were not superior to the whole, but each part was notable in what it brought to the table. Congeniality, Soulfulness, Reliability, Creativity and Technological Skill all came together to form the greatest band in the history of Rock and Roll. If we can undertand the universal utility of these qualities and have them come together, I think we will all become better investors, getting better all the time.
Here's where you can find the new Beatles box set on Amazon (if you buy it, I think I get a lollipop):
Full Disclosure: Nothing in my above commentary should be construed as an invitation to buy or sell any securities. Please see my Terms & Conditions for a full disclaimer.
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.blog comments powered by Disqus
The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.