The Gospel According to Barton Biggs
NEW YORK (Real Money) --
"We must base our asset allocation not on the probabilities of choosing the right allocation but on the consequences of choosing the wrong allocation."
-- Jack Bogle
Barton Biggs is a former creative writing major at Yale University, a former Morgan Stanley head strategist and research director -- he was responsible for the formation of the investment management business at Morgan Stanley -- author of Hedgehogging (my personal favorite book on the hedge fund industry) and founder of hedge fund Traxis Partners.
Barton is an iconic figure, similar to Peter Lynch, Lee Cooperman, George Soros, Stanley Druckenmiller and Jim Chanos. But unlike Omega's Lee Cooperman and ex-Fidelity's Peter Lynch, whose strength is (and was) going belly to belly with company managements in an intense bottom-up approach, Soros Management's George Soros and Duquesne's Stanley Druckenmiller, whose wheelhouse is speculating in foreign exchange and interest rates, and Kynikos' James Chanos, whose strength is on the short side, Barton's turf is in macroeconomic investing and in asset- and geographic-allocation strategy.
Barton is incredibly smart, his investment knowledge base is broad, and he doesn't suffer fools gladly. He can be daring in market view and aggressive in portfolio structure, but he has learned over the years to be disciplined in controlling risk and respectful of Mr. Market.
I have routinely communicated with Barton over the years, and he is nice enough to send me his irregular commentary about the investment turf. That commentary is usually a combination of investment philosophy and a view of the markets rooted in macroeconomic investing. His most recent essay, "It's Never Easy," crossed my desk last week, and I want to summarize his comments, as they represent true pearls of wisdom.
- "Good information, thoughtful analysis, quick but not impulsive reactions, and knowledge of the historic interaction between companies, sectors, countries, and asset classes under similar circumstances in the past are all important ingredients in getting the legendary 'it' right that we all strive so desperately for."