One of my favorite lunch spots is the China Grill in New York City. There, I always take one of the side tables next to the open kitchen, close to the action. Yes, I have been coming here for more than 20 years and this place is an oasis of non-change in a city of constant flux. I have seen many Chefs come and go over the years but the crew who does the actual cooking and grilling has been here forever. The menu has slightly changed, but my favorites, grilled garlic shrimp with black fettuccini & red curry coconut sauce and grilled Szechuan beef with sake, soy, spicy shallots & cilantro, have stayed exactly the same. I love these dishes and their consistency makes predicting what I order and will taste an easy job…
You see, there is only one correct way to make these dishes and the China Grill repeats, repeats and repeats it. The Chefs de Cuisine come and go, because there is little challenge or innovation to bring to such an institution. Things are set in stone: the kitchen works perfectly as it is; just don’t ask for anything else. The cooking and grilling experts do what they do best, and the Chef de Cuisine does best by NOT changing the processes and focuses on quality and improving efficiency.
One of my favorite reads is Byron Wien’s “10 surprises for the coming year”. In this list, Byron Wien reviews events, which the consensus perceives as unlikely, but which he thinks have a more than fair chance of happening. I have been reading these lists, sometimes at the bar of the China grill, for over 20 years and always enjoy his thinking and writing. Byron Wien is in a unique position thanks to his ability to meet with many experts from around the world, from a wide variety of fields. In his latest blog he summarized a series of lunch meetings he held with experts, hedge fund managers, long/short heroes, corporate chiefs, venture capitalists, private equity stars and others over the course of the summer. In this blog, he describes the experts’ moods and expectations and how, over the course of the summer, their outlook and disposition changed significantly, influenced by current events. He concludes that he doubts whether this group of specialists are ever able of predicting a major change in the market. Wow! So, whom do we turn to then? If making a prediction is so challenging, what else can we rely on but well designed processes and strategies, which we repeat, again, again and again? Investment experts seem to do best when they DO NOT change their process/strategy and concentrate on quality and improving efficiency.
Predicting the future brings me to Astrology. I cannot say I have a favorite Astrologer or that I have even read a lot about the subject. However, I wonder if this is not a mistake since financial experts agree over so little and so often miss the mark when it comes to predicting the future. You see, all else equal, the planets and stars need to be aligned for you as an investor, in order for you to perform better than average. Call it luck if you will, because even if you do everything right, ie. Dollar average your way into the market, have a stable process/strategy and invest long term, you may still end up with very different results from someone who invested in the exact same way as you did (amount, process and strategy), but entered the market on a different date. This seems unfair and yes it is… but there is very little you can do about it.
Predicting an investment’s perfect outcome is different from cooking a perfect black fettuccini. The stock market is in constant flux and will always tend to react to current affairs, which are, almost by definition, unpredictable and of which we know little or nothing until they actually occur. Since financial experts seem unable to find a constant consensus, leave predicting the near future to the Chefs de Cuisine and Astrologers. Just remember that in the long run the markets always trend higher and higher.