I came across an interesting article Article Link that had some quotes and lessons from Robert W. Wilson. He managed a hedge fund called Wilson and Associates that he launched in the late 1960s. His fund amassed an incredible 30% annual return during his career. Here are some quotes from the article:
Wilson routinely maintained net exposure between 25% and 125% depending on how bullish or bearish he felt. Even when extremely negative, Wilson was 25% net long. When asked why he never went short, he answered:“Because I never wanted to get up in the morning hoping that things would be getting worse. All intellectuals I think — and I don’t use that as a particularly flattering term — but all intellectuals tend to have a pessimistic streak.
“For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs.”
This Q&A exchange provided good insight into his perspective: Q: “Yet generally speaking, did you make money on your shorts?” A: “I would say from the beginning to the end of it, throwing in the Resorts, I may have broken even on my shorts.”
Q: “So there’s a real lesson, that you had them there. Essentially, as a bit of a hedge.” A: “Absolutely. And it permitted me to make a lot more money on the long side.”
Q: “It extended you the comfort level to be more aggressive on the long side.” A: “Yeah. It’s not just comfort. It’s a matter of, if the market collapses, I still have a lot of money.”
The biggest thing that struck me was that at the end of the article the author provided the following takeaways based off what Wilson said:
- The greatest short sellers barely break even.
- The primary goal of short selling should be to provide cash in a sell-off and let you “back up the truck” on your longs.
What do you guys think about WIlson's investing philosophy? Do you disagree with the authors two takeaways listed above?
