A lesson in patience.....and humility

Jan 07, 2020 | Jeremy Goldfarb


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I just love Barry's posts in his daily publication "The Big Picture"! Some of them are absolute gems, and hidden within are even better ones. I am not sure where he finds the time to scour the headlines for these, but I certainly do appreciate it.

 

An article in WSJ about a then advisor (now broker at Wells Fargo) who bought Bear Stearns just before the financial crisis in 2008. You can read the article here, but if you want the short version, Stephen Bearce, an advisor at the time purchased Bear Stern's shares in March 2008 just before the stock tanked and the business was snapped up by JP Morgan for a fraction of the share price. 4,209 days later, Mr. Bearce broke even on that trade. Putting it into numbers, the 0.21753 shares of JPM that each share of Bear got in the acquisition finally broke even in December.

 

So what is the lesson? Is it patience? Is it humility? Is it something else entirely? I think the answer lies in the reason the purchase was made in the first place. To quote the article "Mr. Bearce was betting that Bear Stearns would be taken over and he could turn a quick profit"  ---- the lesson here is twofold.

 

1- Know what you are comfortable with, and that includes the prospect of loss

2- There is no such thing as a quick buck, but there is such thing as short term luck. Know the difference.

 

Jeremy

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Investing