Top 50 Microcap Investor List: Jonathan Abenaim
This week’s Top-50 feature is a recent Lunch at the Club presenter, Jonathan Abenaim. Jonathan is the Founder and Managing Partner of Arlen House Management, an investment firm whose goal is to combine “a business owner’s mindset with a fundamentally research-intensive process to make high conviction investments in public companies globally.
Click here to read our feature on Jonathan
Not Easy
“It's not supposed to be easy. Anyone who finds it easy is stupid.” —Charlie Munger
In January, we welcomed volatility back to the markets. This past week was another one where volatility was front and center. Stocks went down a lot, then up a little, then down some more, and then up a lot. The ultimate scorecard left all the major averages down over 2% for the week.
We’ve spent much of the past year worried that investors were underestimating the role of competition and getting lost in their Money Dreams. We welcomed Mike Green from Simplify Asset Management to our Lunch at the Club event, and he gave a great presentation on how passive investing has changed certain dynamics of the stock market.
The growth of passive investing—which makes the active decision to buy anytime someone gets paid and adds money to his or her 401(k) plan regardless of price—has likely caused the up cycle of this market to go on longer and reach greater heights than it would have otherwise. Are we starting to see that upward push turn into a downward pull? If we’re entering an economic recession, will the pace of money flowing into 401(k) plans slow enough to make the demand to sell stocks greater than the demand to buy them? Said another way, will the structural forces that have helped fuel the positive returns over the last decade now fuel the losses in a down market?
Time will tell and no one can know for certain. Employees that lose their jobs don’t add to their retirement plans with the same velocity, and inflation may cause retirees to withdraw cash more quickly to cover expenses. Fundamentals may win eventually, but the tide of momentum may pull with a greater force than we’ve seen historically.
Which also creates opportunities. This is a market where you need to Keep Your Head. Earning good returns over a long period of time is hard work. It’s not easy, and it’s not supposed to be.
We’ll end with some words of wisdom from investor Seth Klarman, which seem like words worth reviewing and thinking about in times like these:
Did we ever mention that investing is hard work – painstaking, relentless, and at times confounding? Separating relevant signal from noise can be especially difficult. Endless patience, great discipline, and steely resolve are required. Nothing you do will guarantee success, though you can tilt the odds significantly in your favor by having the right philosophy, mindset, process, team, clients, and culture. Getting those six things right is just about everything.
Complicating matters further, a successful investor must possess a number of seemingly contradictory qualities. These include the arrogance to act, and act decisively, and the humility to know that you could be wrong. The acuity, flexibility, and willingness to change your mind when you realize you are wrong, and the stubbornness to refuse to do so when you remain justifiably confident in your thesis. The conviction to concentrate your portfolio in your very best ideas, and the common sense to nevertheless diversify your holdings. A healthy skepticism, but not blind contrarianism. A deep respect for the lessons of history balanced by the knowledge that things regularly happen that have never before occurred. And, finally, the integrity to admit mistakes, the fortitude to risk making more of them, and the intellectual honesty not to confuse luck with skill.
Tweets of the Week
It’s Back… The DeLorean
The 1980’s sports car featured in the Back to the Future Movie franchise is making a come back. “The company, whose largest shareholder is the DeLorean Motor Company that sells parts for and restores original DeLoreans, is set to reveal its new-age take on John Z. DeLorean's classic coupe at the Pebble Beach Concours d'Elegance in August.” Click the link below for more details!
DeLorean, Reborn as the EVolve, Reveals Its Rear End
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Textron Aviation announces order from fly Exclusive for up to 30 Cessna Citation CJ3+ light jets
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Richer, Wiser, Happier Podcast: How To Harness the Power of Your Mind w/Arnold Van Den Berg
Excess Returns Podcast: Mike Green on the Dangers of the Rise of Passive Investing
Planet MicroCap Podcast: LIVE with Brandon Mackie, Jason Hirschman, Emily Paxhia and Gary Ribe
How Joe Moglia will reform college sports: Former NCAA coach/CEO, coach contracts, and more
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