Tuesday, July 17, 2012

Barton Biggs and the Art of Writing About Investing

 “As investors, we also always have to be aware of our innate and very human tendency to be fighting the last war. We forget that Mr. Market is an ingenious sadist, and that he delights in torturing us in different ways.”

Barton Biggs,  from 2012 note entitled “It’s Never Easy,” via Doug Kass

Legendary investor Barton Biggs died last weekend at age 79.  Biggs was widely known and followed in the financial world, and he will be missed.

Here's an excerpt from one tribute to Biggs that appeared on the Wall Street Journal's Market Pulse blog:

Barton Biggs’s death marks the passing not just of a man but of an entire profession: the market guru.

For years at the end of the 20th century, Mr. Biggs typified a class of Wall Street investment strategists who seemed smarter, wittier and more creative than anyone else in the room.

He won renown as an investment strategist for Morgan Stanley and after retiring from that firm founded and ran a $1.5 billion hedge fund called Traxis Partners. He died on July 14, Morgan Stanley announced....
Mr. Biggs’s pronouncements, and those of highly paid contemporaries such as Abby Joseph Cohen, Byron Wien, Elaine Garzarelli and Edward Kerschner, moved markets and electrified faithful investors, who waited eagerly for their weekly commentaries in the 1980s and 1990s. Their essays were printed in booklets and mailed throughout the nation in the days before email became commonplace.


Biggs was not only a great investor, but he was a terrific writer as well.

Writing about finance - and making it interesting - is a difficult task.

Too many financial articles that I read these days are notable for the fact that they all sound alike.

The same complaints, the same dire forecasts, and the exasperated tone of the authors who can't understand why the world is not bending to their point of view makes them all but unreadable.

Not so with Barton Biggs.

Biggs had a writing style that seemed effortless, and almost conversational in tone.  I always looked forward to his weekly research comments when he was chief investment strategist for Morgan Stanley, and almost always came away with an insight or two that proved helpful in my investing activities.

Not every piece Biggs wrote was strictly about the markets.  Biggs was an avid outdoorsman, and occasionally he would use his weekly piece to talk about a trip he had taken.

For example, one summer Biggs had gone hiking in Sun Valley. He talked about the hot summer walks through the mountain passes, and the welcome ache in his legs at the end of a great day on the trails.  Later, after supper had ended, he and his friends sat on a covered porch at night drinking cold beer watching the lightning bolts over the mountains.  I carried this article in my briefcase for months.

Biggs and other investors of his generation were not always negative or bearish, as so many strategists are today.  He recognized that while markets could occasionally get overvalued (as he famously warned in 1999), more often there was opportunities to be had to investors that were willing to look beyond the obvious and focus on what could go right.

Here's a brief summary of some of his market thoughts, courtesy of Bloomberg:
The New York native predicted the bull market in U.S. stocks that began in 1982 and warned investors away from Japanese shares in 1989 before they collapsed. He sealed his fame telling investors to sell technology companies as they soared in the late 1990s, a judgment dismissed by the press and other investors until the dot-com bubble burst....

After retiring from Morgan Stanley in 2003 at age 70, Biggs started Traxis Partners, a hedge fund, with two other Morgan Stanley (MS) alumni. While he was blindsided by the credit crisis that sent the Standard & Poor’s 500 Index in 2008 to its biggest annual decline since 1937, he correctly called the bottom in U.S. stocks in March 2009, and Traxis’s flagship fund returned three times the industry average in 2009.