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  • Writer's pictureMonmouth Capital

Q4 2021: Captain America

In the Marvel Avengers franchise film, Captain America (spoiler alert… although if you haven’t seen it by now, you probably never will), the home team has a crisis meeting to discuss how to tackle the existential threat from Johann Schmidt, aka Red Skull, who is preparing for a final, devastating assault on the free world from his hidden lair somewhere in Central Europe.

“What are we going to do? We can’t exactly walk up to the front door and knock.”

“Yes we can,” asserts Captain America. “That’s exactly what we are going to do.”

The action cuts immediately to Captain America, on a motorbike, pursued by a dozen baddies, racing through a forest fit for a gateau, heading directly for the entrance to Schmidt’s hidden lair. As you can imagine, as he reaches it, he is beset on all sides by the enemy hordes, firing not just bullets but also these blue laser beams that literally pulverise their targets. Thousands of rounds ping miraculously just past our hero, never finding their mark; those that do make it are incredibly fended off by his vibranium shield. Sometimes, he throws the shield as a weapon, leaving himself wide open – fortunately, none of the baddies can shoot for shit, so he survives.

Even my 11-year-old son was laughing. “This is so risky! Their whole plan depends on Captain America making it through this alive – and just one bullet – just one, even a stray bullet – would be enough to kill him and it’s all over! What will they do then?!”

This brings me to my new way of expressing our entire approach to private client wealth management – a new equation for investment strategy:

Let’s call it “The Inverse Captain America” strategy. Ok, so in the film, maybe one can argue there’s nothing to lose; this is it for humanity so the team gambles everything on one approach. Our clients have a lot more to lose; typically they are entrepreneurs with some significant wealth – and, often, a much larger concentration of wealth still held in their main company.

And, of course, our clients (like everyone else) don’t have a magical shield or superhuman reactions. So we don’t think they should just walk in and bust down the front door of investment. We need to assume they will be caught by a stray bullet – or a dozen other bad outcomes. How do we make sure they are ok in lots of different possible scenarios?

For The Love Of Story

Story. We love a story. We love hearing about that one individual, against insurmountable odds, who made it anyway. And we look for stories everywhere – even in arenas they have no right to be told in, like investment.

We attend a lot of fund manager updates, as you can imagine. One of the most common themes is “story”: how does the manager see the world? And how does he or she expect events to unfold over the coming period? It doesn’t matter how often we discover that these stories aren’t terribly helpful for long-term private client investment strategy. They remain a mainstay of manager presentations because the attendees – the viewers of this investment film, if you will – are always thirsty for story. The seemingly never-ending Avengers film franchise did end, eventually; only to spawn a never-ending stream of spin-off series that my kids are marching through with grim resolution.

Searching for that Captain America, all-or-nothing winning move makes for a great story and can be great fun. As the new year dawns, it’s tempting to apply our intelligence, knowledge and experience to map out what we think the world will be like in 2022 – and actually that can be a useful exercise for lots of reasons (see Tetlock’s work on forecasting for starters

But not when it comes to fulfilling a role as custodian of clients’ wealth. Keeping the dazzling excitement of the “story” out of our thinking might just be the most important mission of all.

- Faisal Sheikh, Managing Director


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