“Everything can be taken from a man but one thing: the last of human freedoms – to choose one’s attitude in any given set of circumstances, to choose one’s own way.”
Get your Free
financial review
If you’re not familiar with the name Anthony Daniels, you might know him by his nom de plume Theodore Dalrymple, under which he writes for, among other titles, ‘The Daily Telegraph’ and ‘The Spectator’. Daniels is a now a retired prison doctor and psychiatrist, but also a profoundly gifted writer and thinker. In this presentation he asks whether our society is broken, and his argument would tend to conclude in the affirmative.
One example he cites is of a single mother in Birmingham, living on welfare in a house with her three small children. Outside, is a garden littered with domestic rubbish. Daniels asks the mother whether it might not be a good idea to clear the rubbish so that her children can play freely in the garden without risk of injury or disease. She replies that she’s called the council but, as yet, nobody has bothered to come round.
Daniels goes on to cite a phrase from a poem by the great English writer William Blake. The poem in question is London:
“In every cry of every Man,
In every Infants cry of fear,
In every voice: in every ban,
The mind-forg’d manacles I hear..”
Those “mind-forg’d manacles” are iron chains of our own casting.
John Milton makes a similar point in ‘Paradise Lost’ when he has the Devil, having been cast down to Hell, suggesting (perhaps somewhat disingenuously, as his intent is to goad on the other fallen angels to resume battle with God):
“The mind is its own place, and in it self
Can make a Heav’n of Hell, a Hell of Heav’n.”
In any event, as both these quotations strongly suggest, the overwhelming thing that can make the difference in our lives is not so much our circumstances but our attitude. To put it another way, mental toughness counts for a lot. It’s not the dog in the fight, so much as the fight in the dog.
This is the point made by Morgan Housel in his excellent presentation ‘What other industries teach us about investing’, which you can watch here. The story of Grace Grahner is instructive (emphasis ours):
“Grace Grahner.. was born in 1909, just right outside of Chicago nearby. And she had kind of a hard life. She was orphaned as a child, she began her career in the bottom of the Great Depression. Finally found a career as a secretary, where she worked her entire life. Never married, never had kids, never learned how to drive a car. Lived almost her entire life in a one room house, not far from here.
“By all accounts, she was a lovely lady, but lived kind of a sad life. And Grace Grahner died in 2010, she was 100 years old. And everyone who knew her was completely shocked to learn, when she died, that she had seven million dollars to her name, that she left all of it to charity, and that began kind of a search among the people who knew her, that said, “How does this humble secretary accumulate seven million dollars?” And her secret was, she really had no secret at all. She saved what little she could, she put it in the stock market, she let it compound for 80 years and that was it, end of story.
“The second investor I want to talk about today is a guy named Richard. Save his last name, because you’re not supposed to criticize people in public. Although I do a lot. Richard had almost the exact opposite background of Grace Grahner. Born into a wealthy family, went to the University of Chicago, got his MBA at Harvard Business School, went to work on Wall Street, worked his way up at some of the biggest investment firms, became the vice chairman of one of the largest investment banks and without exaggerating was one of the most powerful people in global finance.
“The day after Grace Grahner died, Richard filed for personal bankruptcy. He told the bankruptcy judge that the financial crisis completely wiped him out, he had no more assets, no more income and he was fighting to save foreclosure on his house. And what’s interesting about these stories, I think, is that in no other industry except finance are those stories possible. There’s no other industry in which someone with no education, no background and no experience can vastly outperform someone with the best background, the best education, the best experience.
“It’s unthinkable that Grace Grahner could have performed heart surgery better than a Harvard-educated cardiologist, or built a skyscraper better than the best construction company. It’s completely unthinkable that that could ever happen, but it happens in investing. And what I think it shows is that investing is not necessarily about what you know, it’s about how you behave.”
For avid consumers of news, it’s difficult not to get wholly disillusioned by the headlines at present. Conflict in the Ukraine and Gaza rumbles on; politics globally is a chaotic hot mess; many financial markets remain horribly expensive, and the US debt dynamic looks downright dreadful.
The ability to remain calm, patient and, we might say, somewhat “stoical” is not evenly distributed among investors.
What Morgan Housel might well have said is that successful long-term investing is really about a straightforward binary decision between maths and magic. You can believe in maths (i.e., that the underlying profits of a successful business, over time, will broadly be matched by subsequent shareholder returns), or you can believe in the magic that goes with any number of plausible-sounding narratives involving growth stocks which absolves them of having to justify any remotely sensible investing metric whatsoever.
If you believe that anything is possible when it comes to technology companies or web-based companies or new media companies, you will be willing to pay any kind of earnings multiple to own the likes of Nvidia. Naturally, we prefer to follow the maths, and then just wait for the miracle of compounding to work its own inexorable charm on future shareholder returns.
And the beauty of true value stocks (as opposed to faddish but speculative growth stories) is that if they get cheaper, you can buy more of them without having to be too concerned that may in fact be catching a falling knife. Value helps stop you from overpaying.
Never give in
As the result of a serendipitous collision on Twitter / X, we recently read William Manchester and Paul Reid’s magnificent biography of Winston Churchill, ‘The Last Lion’. This is, quite simply, the best biography we have ever read.
Not just because Churchill is surely one of the most interesting men ever to have lived, or because he played a pivotal role in our country’s defence against Adolf Hitler in the Second World War, but because it is written with a sense of the vast sweep of history, culture and human nature, not least the enduring human spirit against adversity.
The books (there are three volumes in total, running each to over 800 pages) are a fascinating history lesson about the society of Victorian and Edwardian England and the broader world of Churchill’s time.
Even though we know from the vantage point of the 21st century how the history of the Second World War plays out, ‘The Last Lion’ is so well-written, so grippingly “in the moment” with a wealth of sourced material, that it almost manages to persuade you, as you read it, that our country’s fate could yet be in the balance.
The best history is always fascinating. ‘The Last Lion’ provokes some intriguing counterfactuals. If Britain had had a more informed and aggressive government during the 1930s appeasement crisis, could war have been averted? If Churchill had not been installed in 1939, could we have won the war without him? (We happen to think not, but the question bears asking.)
Bear in mind that Britain fought essentially alone for two years, haemorrhaging blood and treasure, while we waited desperately for the US to come in on our side. If the Japanese had not invaded Pearl Harbour, Franklin D. Roosevelt, fighting his own domestic pacifists and isolationists, might not have joined the fight when he did, and the course of the war might have been very different. Or if Hitler had not pursued the grotesque folly of invading Russia..
As an alumnus, Churchill gave a speech at Harrow School in October 1941. Within it, this extract is particularly important (emphasis added):
“You cannot tell from appearances how things will go. Sometimes imagination makes things out far worse than they are; yet without imagination not much can be done. Those people who are imaginative see many more dangers than perhaps exist; certainly many more than will happen; but then they must also pray to be given that extra courage to carry this far-reaching imagination. But for everyone, surely, what we have gone through in this period – I am addressing myself to the School – surely from this period of ten months this is the lesson: never give in, never give in, never, never, never, never – in nothing, great or small, large or petty – never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy. We stood all alone a year ago, and to many countries it seemed that our account was closed, we were finished. All this tradition of ours, our songs, our School history, this part of the history of this country, were gone and finished and liquidated.
“Very different is the mood today. Britain, other nations thought, had drawn a sponge across her slate. But instead our country stood in the gap. There was no flinching and no thought of giving in; and by what seemed almost a miracle to those outside these Islands, though we ourselves never doubted it, we now find ourselves in a position where I say that we can be sure that we have only to persevere to conquer.”
There are countless occasions during the third volume of ‘The Last Lion’, “Defender of the Realm, 1940-1965” when a reader totally unfamiliar with the history of the Second World War could plausibly think: well, that’s it, they’re finished. People have short memories. Especially when they’re not taught history.
Hitler’s blitzkrieg carved through country after country in Europe like a hot knife through soft butter. The evacuation of the British Expeditionary Force from Dunkirk, alone, now seems nothing short of miraculous.
And then you come to appreciate that the only way Britain could possibly have survived as a combatant power was when Hermann Göring, as commander in chief of the Luftwaffe, made the fatal (for Germany, at any rate) tactical error of diverting German air raids from our air fields – where the RAF was a matter of hours from complete obliteration – and focusing them on our cities and ports instead. This alone, with the benefit of hindsight, may have been one of the greatest military blunders of the war.
It is difficult to read this superb book without succumbing to moments of high emotion. Here, for example, is Manchester and Reid’s account of those German raids on our air fields:
“Churchill followed the day’s fighting from No. 11 Group headquarters at Uxbridge, and he left clearly affected. Climbing into his limousine with Ismay, he said, “Don’t speak to me. I’m too moved.” His lips were trembling. They rode in silence for a few minutes. Then Churchill turned to Ismay and said something that “burned into” Ismay’s mind, so much so that he went home that night and repeated the words to his wife.
“Five days later, when the most difficult and dangerous period in the battle was about to begin, Churchill paused during a long address to the House of Commons on the overall war situation, and delivered his tribute to the RAF:
“The gratitude of every home in our island, in our Empire, and indeed throughout the world, except in the abodes of the guilty, goes out to the British airmen who, undaunted by odds, unwearied in their constant challenge of mortal danger, are turning the tide of the World War by their prowess and their devotion.”
“Then, he spoke the words that had so moved Ismay:
“Never in the field of human conflict was so much owed by so many to so few.”
Two final suggestions. Per Dalrymple, Blake and Milton, the biggest threat facing us – in the worlds of the real as well as the narrowly financial – is the threat we create within our own minds. Secondly, whatever political and economic challenges our world does face, it makes sense to try and be courageous about them, or at the very least, stoical. As Churchill himself said,
“I am an optimist. It does not seem too much use being anything else.”
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks.
“Everything can be taken from a man but one thing: the last of human freedoms – to choose one’s attitude in any given set of circumstances, to choose one’s own way.”
Get your Free
financial review
If you’re not familiar with the name Anthony Daniels, you might know him by his nom de plume Theodore Dalrymple, under which he writes for, among other titles, ‘The Daily Telegraph’ and ‘The Spectator’. Daniels is a now a retired prison doctor and psychiatrist, but also a profoundly gifted writer and thinker. In this presentation he asks whether our society is broken, and his argument would tend to conclude in the affirmative.
One example he cites is of a single mother in Birmingham, living on welfare in a house with her three small children. Outside, is a garden littered with domestic rubbish. Daniels asks the mother whether it might not be a good idea to clear the rubbish so that her children can play freely in the garden without risk of injury or disease. She replies that she’s called the council but, as yet, nobody has bothered to come round.
Daniels goes on to cite a phrase from a poem by the great English writer William Blake. The poem in question is London:
“In every cry of every Man,
In every Infants cry of fear,
In every voice: in every ban,
The mind-forg’d manacles I hear..”
Those “mind-forg’d manacles” are iron chains of our own casting.
John Milton makes a similar point in ‘Paradise Lost’ when he has the Devil, having been cast down to Hell, suggesting (perhaps somewhat disingenuously, as his intent is to goad on the other fallen angels to resume battle with God):
“The mind is its own place, and in it self
Can make a Heav’n of Hell, a Hell of Heav’n.”
In any event, as both these quotations strongly suggest, the overwhelming thing that can make the difference in our lives is not so much our circumstances but our attitude. To put it another way, mental toughness counts for a lot. It’s not the dog in the fight, so much as the fight in the dog.
This is the point made by Morgan Housel in his excellent presentation ‘What other industries teach us about investing’, which you can watch here. The story of Grace Grahner is instructive (emphasis ours):
“Grace Grahner.. was born in 1909, just right outside of Chicago nearby. And she had kind of a hard life. She was orphaned as a child, she began her career in the bottom of the Great Depression. Finally found a career as a secretary, where she worked her entire life. Never married, never had kids, never learned how to drive a car. Lived almost her entire life in a one room house, not far from here.
“By all accounts, she was a lovely lady, but lived kind of a sad life. And Grace Grahner died in 2010, she was 100 years old. And everyone who knew her was completely shocked to learn, when she died, that she had seven million dollars to her name, that she left all of it to charity, and that began kind of a search among the people who knew her, that said, “How does this humble secretary accumulate seven million dollars?” And her secret was, she really had no secret at all. She saved what little she could, she put it in the stock market, she let it compound for 80 years and that was it, end of story.
“The second investor I want to talk about today is a guy named Richard. Save his last name, because you’re not supposed to criticize people in public. Although I do a lot. Richard had almost the exact opposite background of Grace Grahner. Born into a wealthy family, went to the University of Chicago, got his MBA at Harvard Business School, went to work on Wall Street, worked his way up at some of the biggest investment firms, became the vice chairman of one of the largest investment banks and without exaggerating was one of the most powerful people in global finance.
“The day after Grace Grahner died, Richard filed for personal bankruptcy. He told the bankruptcy judge that the financial crisis completely wiped him out, he had no more assets, no more income and he was fighting to save foreclosure on his house. And what’s interesting about these stories, I think, is that in no other industry except finance are those stories possible. There’s no other industry in which someone with no education, no background and no experience can vastly outperform someone with the best background, the best education, the best experience.
“It’s unthinkable that Grace Grahner could have performed heart surgery better than a Harvard-educated cardiologist, or built a skyscraper better than the best construction company. It’s completely unthinkable that that could ever happen, but it happens in investing. And what I think it shows is that investing is not necessarily about what you know, it’s about how you behave.”
For avid consumers of news, it’s difficult not to get wholly disillusioned by the headlines at present. Conflict in the Ukraine and Gaza rumbles on; politics globally is a chaotic hot mess; many financial markets remain horribly expensive, and the US debt dynamic looks downright dreadful.
The ability to remain calm, patient and, we might say, somewhat “stoical” is not evenly distributed among investors.
What Morgan Housel might well have said is that successful long-term investing is really about a straightforward binary decision between maths and magic. You can believe in maths (i.e., that the underlying profits of a successful business, over time, will broadly be matched by subsequent shareholder returns), or you can believe in the magic that goes with any number of plausible-sounding narratives involving growth stocks which absolves them of having to justify any remotely sensible investing metric whatsoever.
If you believe that anything is possible when it comes to technology companies or web-based companies or new media companies, you will be willing to pay any kind of earnings multiple to own the likes of Nvidia. Naturally, we prefer to follow the maths, and then just wait for the miracle of compounding to work its own inexorable charm on future shareholder returns.
And the beauty of true value stocks (as opposed to faddish but speculative growth stories) is that if they get cheaper, you can buy more of them without having to be too concerned that may in fact be catching a falling knife. Value helps stop you from overpaying.
Never give in
As the result of a serendipitous collision on Twitter / X, we recently read William Manchester and Paul Reid’s magnificent biography of Winston Churchill, ‘The Last Lion’. This is, quite simply, the best biography we have ever read.
Not just because Churchill is surely one of the most interesting men ever to have lived, or because he played a pivotal role in our country’s defence against Adolf Hitler in the Second World War, but because it is written with a sense of the vast sweep of history, culture and human nature, not least the enduring human spirit against adversity.
The books (there are three volumes in total, running each to over 800 pages) are a fascinating history lesson about the society of Victorian and Edwardian England and the broader world of Churchill’s time.
Even though we know from the vantage point of the 21st century how the history of the Second World War plays out, ‘The Last Lion’ is so well-written, so grippingly “in the moment” with a wealth of sourced material, that it almost manages to persuade you, as you read it, that our country’s fate could yet be in the balance.
The best history is always fascinating. ‘The Last Lion’ provokes some intriguing counterfactuals. If Britain had had a more informed and aggressive government during the 1930s appeasement crisis, could war have been averted? If Churchill had not been installed in 1939, could we have won the war without him? (We happen to think not, but the question bears asking.)
Bear in mind that Britain fought essentially alone for two years, haemorrhaging blood and treasure, while we waited desperately for the US to come in on our side. If the Japanese had not invaded Pearl Harbour, Franklin D. Roosevelt, fighting his own domestic pacifists and isolationists, might not have joined the fight when he did, and the course of the war might have been very different. Or if Hitler had not pursued the grotesque folly of invading Russia..
As an alumnus, Churchill gave a speech at Harrow School in October 1941. Within it, this extract is particularly important (emphasis added):
“You cannot tell from appearances how things will go. Sometimes imagination makes things out far worse than they are; yet without imagination not much can be done. Those people who are imaginative see many more dangers than perhaps exist; certainly many more than will happen; but then they must also pray to be given that extra courage to carry this far-reaching imagination. But for everyone, surely, what we have gone through in this period – I am addressing myself to the School – surely from this period of ten months this is the lesson: never give in, never give in, never, never, never, never – in nothing, great or small, large or petty – never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy. We stood all alone a year ago, and to many countries it seemed that our account was closed, we were finished. All this tradition of ours, our songs, our School history, this part of the history of this country, were gone and finished and liquidated.
“Very different is the mood today. Britain, other nations thought, had drawn a sponge across her slate. But instead our country stood in the gap. There was no flinching and no thought of giving in; and by what seemed almost a miracle to those outside these Islands, though we ourselves never doubted it, we now find ourselves in a position where I say that we can be sure that we have only to persevere to conquer.”
There are countless occasions during the third volume of ‘The Last Lion’, “Defender of the Realm, 1940-1965” when a reader totally unfamiliar with the history of the Second World War could plausibly think: well, that’s it, they’re finished. People have short memories. Especially when they’re not taught history.
Hitler’s blitzkrieg carved through country after country in Europe like a hot knife through soft butter. The evacuation of the British Expeditionary Force from Dunkirk, alone, now seems nothing short of miraculous.
And then you come to appreciate that the only way Britain could possibly have survived as a combatant power was when Hermann Göring, as commander in chief of the Luftwaffe, made the fatal (for Germany, at any rate) tactical error of diverting German air raids from our air fields – where the RAF was a matter of hours from complete obliteration – and focusing them on our cities and ports instead. This alone, with the benefit of hindsight, may have been one of the greatest military blunders of the war.
It is difficult to read this superb book without succumbing to moments of high emotion. Here, for example, is Manchester and Reid’s account of those German raids on our air fields:
“Churchill followed the day’s fighting from No. 11 Group headquarters at Uxbridge, and he left clearly affected. Climbing into his limousine with Ismay, he said, “Don’t speak to me. I’m too moved.” His lips were trembling. They rode in silence for a few minutes. Then Churchill turned to Ismay and said something that “burned into” Ismay’s mind, so much so that he went home that night and repeated the words to his wife.
“Five days later, when the most difficult and dangerous period in the battle was about to begin, Churchill paused during a long address to the House of Commons on the overall war situation, and delivered his tribute to the RAF:
“The gratitude of every home in our island, in our Empire, and indeed throughout the world, except in the abodes of the guilty, goes out to the British airmen who, undaunted by odds, unwearied in their constant challenge of mortal danger, are turning the tide of the World War by their prowess and their devotion.”
“Then, he spoke the words that had so moved Ismay:
“Never in the field of human conflict was so much owed by so many to so few.”
Two final suggestions. Per Dalrymple, Blake and Milton, the biggest threat facing us – in the worlds of the real as well as the narrowly financial – is the threat we create within our own minds. Secondly, whatever political and economic challenges our world does face, it makes sense to try and be courageous about them, or at the very least, stoical. As Churchill himself said,
“I am an optimist. It does not seem too much use being anything else.”
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks.
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