I just finished reading Anthony Bourdain’s Kitchen Confidential. I’d highly recommend it. I also loved watching Bourdain’s Parts Unknown. If you haven’t seen it, you can find episodes on YouTube.
Bourdain was a child of the ’70s. He came to prominence with the publication of his book that went behind the scenes of the restaurant and cooking business. This is how he describes himself:
“If the chef is anything like me, the cooks are a dysfunctional, mercenary lot, fringe dwellers motivated by money, the peculiar lifestyle of cooking, and grim pride.”
There was a chapter on how he runs his kitchen that stuck out. Something about it made me think of the parallels when it comes to investing.
“What most people don’t get about professional level cooking is that it is not at all about the best recipe, the most innovative presentation, the most creative marriage of ingredients, flavours and textures; that, presumably, was all arranged long before you sat down for dinner.
"Line cooking – the real business of preparing the food you eat – is more about consistency, about mindless, unvarying repetition, the same series of tasks performed over and over and over again in exactly the same way.
"The last thing a chef wants in a line cook is an innovator, somebody with ideas of his own who is going to mess around with the chef’s recipes and presentations. Chefs require blind, near fanatical loyalty, a strong back and an automation like consistency of execution under battlefield conditions.”
I like this because it comes down to a process—a framework that can be repeated, over and over, to get the same predictable result. That’s exactly what you want from a financial plan and your portfolio.
Let me put it another way.
Your advisor or portfolio manager being “creative” with your portfolio because of their unique insights into the current climate or global macro isn’t a sign of strength, it's a sign of weakness.
Is it really Warren Buffett that sits on their credit committee? If it is, then by all means, let him be as creative as he wants. But the odds are that the next Warren Buffett is not sitting in an advisory office in Sandton putting together PowerPoint presentations
What you’re really looking for is a repeatable strategy that works. The hard work of building and testing that strategy was done long ago, grounded in years of empirical research and data analysis.
Tested over and again and again under all market conditions.
What you should see in your proposal and in your meetings should simply be the application of that framework.
I’ll repeat that last line of Bourdain’s –
“…require blind, near fanatical loyalty, a strong back and an automation-like consistency of execution under battlefield conditions.”
I like that. In investing, you should be blind to the distractions, with automation-like consistency in executing the rules, under battlefield conditions; namely, the next market crash.
Follow the rules, and you’ll be okay.
Matthew Matthee has a wealth management business that specialises in retirement planning and investments. He writes about financial markets, investments, and investor psychology. He holds a Masters Degree in Economics from Stellenbosch University and a Post Graduate Diploma in Financial Planning from UFS. MatthewM@gravitonwm.com
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