{"id":1175,"date":"2010-03-24T09:03:06","date_gmt":"2010-03-24T13:03:06","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=1175"},"modified":"2010-03-24T09:11:20","modified_gmt":"2010-03-24T13:11:20","slug":"tennis-and-the-discipline-of-investing","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=1175","title":{"rendered":"Tennis and the discipline of investing"},"content":{"rendered":"

Check out these big tennis matches. don’t look at the scores. Look at the points. You’ll find the whole match was won by a couple of points — 110 points won to 108 points lost. The discipline of battling through so many losing points is what makes championships. There’s one big difference between tennis and investing. You don’t have to play all the points in investing. In tennis you do. In investing, you can invoke my favorite mantra, “When in doubt, stay out.<\/strong>“<\/p>\n

ING asked investors where they got their ideas from:<\/p>\n

\"\"<\/a><\/p>\n

The good news so many generated their own ideas. The bad news is they listened so heavily to financial web sites (like this one).<\/p>\n

I was reading Paul Kedrosky’s Infectious Greed<\/a>. He writes:<\/p>\n

Dan Primack at PE Hub has some savvy & provocative analysis of Yale\u2019s (supposedly contrarian) increase in its allocation to private equity:<\/p>\n

The allocation increase was reported in Yale\u2019s Annual Endowment Report., But Yale also publishes something called the Annual Financial Report, which notes the following:<\/p>\n

Under the terms of certain limited partnership and limited liability company agreements for private equity and real estate investments, the University is obligated to remit additional funding periodically as capital calls are exercised. At June 30, 2009, the University had uncalled commitments of approximately $7.6 billion.<\/p>\n

For context, Yale\u2019s entire endowment was valued at just $16.3 billion as of June 30. And then it gets worse:<\/p>\n

The University has various sources of internal liquidity at its disposal, including cash, cash equivalents and marketable debt and equity securities. If called upon at June 30, 2009, management estimates that it could have liquidated approximately $3.6 billion (unaudited) to meet short-term needs.<\/p>\n

In other words: If all of the uncalled commitments came due on July 1, Yale would not even have been able to meet half of them.<\/p>\n

One commentator on the above post replied, “VCs don’t like to hear this, but a capital call is optional. You can try to collect on a limited who would rather delay, but only once. And after that, you will never do biz with that limited again, because he will tell you to go pound sand.”<\/p>\n

This is simply not true. Capital calls are not<\/strong> optional. If you don’t make a capital call, the fund is likely to sell your interest to fund your call. Whatever’s left — which won’t be much — they may keep to fund future calls, or return the balance to you — if there is one. In short, you better make your capital call.<\/p>\n

Returning to the chart, I do like the fact that most older investors \u00a0have learned not to trust their friends and their work colleagues.<\/p>\n

Beating a dead horse. BankDirect is the Internet banking division of Texas Capital Bank, which is FDIC-insured. Hence BankDirect’s deposits are probably FDIC-insured. But \u00a0frankly, I would not give BankDirect any of my money. Reasons:<\/span><\/span><\/span><\/strong><\/p>\n

1. “Probably” is not good enough in a Post-Madoff world. \u00a0A fellow called Jim White at Texas Capital Bank instanced an FDIC document.\u00a0It showed BankDirect, SSB merged into Texas Capital Bank, National Association.\u00a0It shows that BankDirect has a Cert # of 35447, which the FDIC (after 20 minutes on the phone with them) cannot find.\u00a0It says on BankDirect\u2019s web site that BankDirect is a division of Texas National Bank.\u00a0I asked the FDIC for verification on this. They said they had none. Please contact the Office of the Comtroller of the Currency.<\/span><\/p>\n

I then spoke with the OCC. The OCC said they could find no record in their system that BankDirect was a part of Texas Capital Bank.<\/p>\n

2. There’s something seriously wrong with a bank who won’t talk to a financial blogger (i.e. me). Ever since I asked their chairman emeritus, Jody Grant, for more information on BankDirect’s alleged FDIC insurance last Thursday, the bank simply doesn’t return phone calls or identify their executives who send me occasional stuff by email. For example, there’s a fellow called “Jim White,” who has responded to my emails. But he won’t give me either his phone number or his position within the Bank. \u00a0He actually emailed me, “please understand that I am not available for comment.<\/em>” Such \u00a0strange behavior by \u00a0a publicly-listed company — the first like this I’ve seen in 40+ years of financial reporting — \u00a0must raise a red flag. Why Jody Grant simply doesn’t pick up the phone and talk to me — like a normal human being — beats me.<\/p>\n

<\/span><\/strong><\/p>\n

There’s a lesson here? From the English newspaper, The Independent,<\/a><\/strong> comes this delicious story:<\/span><\/span><\/span><\/strong><\/p>\n

<\/strong>The coded command was: “Willy, go and get the green file out of the car.” It was the cue for the vanguard of an all-pensioner kidnapping team \u2013 led by its 74-year-old ringleader \u2013 to limp into action. Their target: the investment adviser they accused of losing their money during the financial crisis.<\/p>\n

It also marked the start of a horrific four-day kidnap ordeal for James Amburn, a respectable American-born consultant at the hands of a gang of five pensioners aged between 61 and 80. Mr Amburn was snatched from his home, driven 300 miles in the boot of a car, hidden in a cellar, interrogated and beaten. “I feared for my life \u2013 I did not know whether I would survive,” he recalled.<\/p>\n

The final chapter of the story was played out in a Bavarian courtroom yesterday, when four of the pensioners were sentenced for the kidnapping and torturing of Mr Amburn after they lost investments worth \u20ac2.4m (\u00a32.2m) entrusted to him during the credit crunch. Roland K, the ringleader, was jailed for six years.<\/p>\n

Karl Niedermeyer, the presiding judge, described their crimes as a “spectacular case of individuals taking justice into their own hands”.<\/p>\n

\"\"<\/a><\/p>\n

Two of the defendants, Roland K and his wife Sieglinde, arrive at court in Traunstein, near Munich.<\/em><\/p>\n

\"\"<\/a><\/p>\n

James Amburn, kidnapped financial adviser: ‘I thought they were going to <\/em>take\u00a0me\u00a0out<\/em><\/span><\/span> into the woods and shoot me’<\/em><\/p>\n

The events that led up to what is believed to be Germany’s first kidnapping by pensioners began in the late 1990s. Roland K and his wife Sieglinde started investing their capital in Florida’s then booming property market via an investment company run by Mr Amburn. In the early years, the Ks reaped handsome returns and entrusted their adviser with even more cash. But their investments crashed as a result of the sub-prime mortgage crisis and by early 2009, the Ks and three other pensioners who had invested were clamouring for their cash to be returned. Mr Amburn did not provide it.<\/p>\n

Desperate for their money, Roland K and his accomplice Willy D, 61, went to Mr Amburn’s home in the German cathedral city of Speyer in June last year with a plan to kidnap him.<\/p>\n

After their victim returned from the pub, they sat on him and bound him with yards of brown sticky tape they had bought the day before at their local DIY shop. The two pensioners then bundled the 57-year-old Mr Amburn, his mouth gagged with tape, into a specially made removal company carton they had brought with them.<\/p>\n

Sweating profusely, the two men lifted the box on to a trolley and staggered past unsuspecting customers sitting outside cafes as they pushed it towards their silver Audi 8 saloon parked some 500 yards across town.<\/p>\n

“If anybody has asked what was inside, we had an answer ready,” admitted Roland K. “We were going to tell them it contained a marble statue.”<\/p>\n

They drove Mr Amburn to Roland K’s holiday home on the shores of lake Chiemsee in Bavaria. On the way, Mr Amburn freed himself sufficiently to grab a crowbar lying in the boot and start smashing the boot. Roland K stopped, opened the boot, beat Amburn for “wantonly damaging his car” and broke two of his ribs.<\/p>\n

Mr Amburn was held semi-naked in a cellar in the house and taken out for interrogation sessions in the garage. These were also attended by Gerhard and Iris F, aged 63 and 66, a doctor couple who live nearby and who had also lost money through Mr Amburn. “I thought they were going to take me out into the woods and shoot me,” Mr Amburn told the court.<\/p>\n

During the trial in the Bavarian city of Traunstein, Roland K tried repeatedly to play down the kidnapping and told disbelieving judges that Mr Amburn had been taken to Chiemsee so that the “mountain air might help him to think better”.<\/p>\n

He claimed that the pensioner gang had held their captive in an “extra guest room” in the cellar and that they held “meetings” about their missing investments in the “office\/garage” of the house. “We treated him well. He was always given an excellent three-course dinner by my wife,” insisted Roland K.<\/p>\n

However, the kidnappers did allow their chain-smoking captive to take cigarette breaks in the garden. Thinking he had been left unnoticed, Mr Amburn leapt over the garden wall in his underpants one rainy afternoon and ran down the street in the wealthy Bavarian resort town shouting: “Help \u2013 I’ve been kidnapped.”<\/p>\n

His abductors followed in hot pursuit in their silver Audi shouting: “Stop that man, he’s a burglar.” The well-to-do burghers of Chiemsee preferred to believe their own neighbours and promptly grabbed Mr Amburn and pinned him to the pavement before handing him back to his pensioner abductors.<\/p>\n

Back in his cellar prison, Mr Amburn managed to convince his kidnappers that he could return some of their money if they allowed him to send a fax to a Swiss bank to organise a cash transfer. He was able to send a message with the fax which appealed to its recipients in a lightly coded form to “please call the police”.<\/p>\n

Within a matter of hours the Chiemsee house was surrounded by 40 heavily armed police from Bavaria’s anti-terrorist unit. The five members of the “pensioner gang” were instantly arrested.<\/p>\n

Four were convicted yesterday and given sentences ranging from an 18-month suspended sentence and the six-year jail term for Roland K for kidnapping and torturing Mr Amburn. The fifth pensioner, who is aged 67, will be tried later because of illness.<\/p>\n

A good year to die. A friend died last week, depriving the IRS of millions of dollars of estate taxes. Yes, there is good tax news: There’s no Federal estate tax if you die in 2010. Which brings me to an old “joke.” <\/span><\/span><\/span><\/strong><\/p>\n

An elderly woman decided to prepare her will and told her preacher she had two final requests.<\/p>\n

First, she wanted to be cremated, and second, she wanted her ashes scattered over Walmart.<\/p>\n

“Walmart?” the preacher exclaimed.<\/p>\n

“Why Walmart?”<\/p>\n

“Then I’ll be sure my daughters visit me twice a week”<\/p>\n

How times change. The joke used to feature Bloomingdales.<\/p>\n

\"\"<\/a><\/p>\n

Harry Newton, who is teaching himself the discipline of “moving on” — in both tennis and investing. Take your lumps. Concentrate harder. With luck you’ll stay in the game and ultimately win the match.<\/p>\n","protected":false},"excerpt":{"rendered":"

Check out these big tennis matches. don’t look at the scores. Look at the points. You’ll find the whole match was won by a couple of points — 110 points won to 108 points lost. The discipline of battling through so many losing points is what makes championships. There’s one big difference between tennis and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1175","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/1175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1175"}],"version-history":[{"count":0,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/1175\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}