I took a call from a client over the weekend asking why they do not get the returns their neighbor does? First thing I asked was to find out how much their neighbor was down in 2008. They were not overly impressed with the answer they got back to that question.
Do you remember the children’s story of The Big Bad Wolf and the Three Little Pigs? Fiddler Pig and Fifer Pig much preferred dancing, singing and playing to building protection against the Big Bad Wolf – in fact, they made fun of their cousin Practical Pig, who spent his time building his sturdy home of brick and stone rather than singing and dancing in the sun with Fiddler and Fifer. Fiddler and Fifer, singing “Who’s afraid of the Big Bad Wolf, Big Bad Wolf, Big Bad Wolf?”, carelessly threw together their houses of sticks and straw and returned to singing and dancing just as quickly as they could. As you probably recall, when the Big Bad Wolf inevitably showed up, he huffed and puffed and blew down the houses of Fiddler and Fifer pig, who ran squealing in mortal fear to Practical Pig’s brick home, begging to be let in before the Big Bad Wolf ate them up. Practical Pig, feeling sorry for them, let them in and saved them from the Big Bad Wolf (interestingly, in the German version of this story, the Big Bad Wolf eats Fiddler and Fifer right on Practical Pig’s doorstep!). The Big Bad Wolf even tried to sneak down the chimney of Practical Pig’s brick and stone house, but Practical Pig outsmarted him there, too. This tale is directly applicable to our risk-managed investing.
Risk-Managed investors are Practical Pig, intentionally foregoing some singing and dancing and even enduring the taunts of Fiddler and Fifer pig who dance and play in the sunshine while making fun of Practical Pig. But when the Big Bad Wolf shows up, well, the survivor is Practical Pig, and – unlike the children’s story – there’ll be no one around to save Fiddler and Fifer Pig from the Big Bad Wolf.
Check out this great old Disney Cartoon
(https://www.youtube.com/watch?v=dl5rvGmwBfk) and think about how you, our clients benefit and should all be just like Practical Pig.