The month of May was a treacherous one; continuing concerns over sovereign debt, the stability of the Euro, North Korean saber rattling, and the sustainability of the economic recovery - not to mention the frightening "Flash Crash" of May 6th caused a very volatile market environment. For half the month I was on vacation in Europe. While on this “vacation”, I found myself monitoring the markets nearly 7/24 on my Blackberry and running up a $1,800 cell phone bill. Such is the life of a broker in the 21st century!
It is times like these that try a broker’s soul. Risk, drawdowns, and of course, client relations and retention are a natural part of every broker's job. These elements and a month such as we just experienced are also a test of fire, a test from which many brokers never recover. It is the management of these factors that determines the viability and success of an IB. The relationships that I have made with fellow brokers through NIBA are helpful in times such as these. The open lines of communication allow us to discuss issues and solutions to problems that arise in this or any trading/business environment.
Earlier in the month along with nearly 40,000 other Berkshire Hathaway shareholders I made the pilgrimage to the annual meeting and related festivities in Omaha. Throughout the meeting, both chairmen, Mr. Buffett and Mr. Munger were unapologetic optimists in the future of the United States, the stock market, and of capitalism itself. They emphasized that successful investing is as much about defense as about offense - avoiding "stupid" mistakes, than it is about making the "big score." Mr. Buffett said he does not expect equities to produce the same kind of returns they have in the past, but still will be higher than bonds and/or cash. In response to massive government deficits and an ever-increasing public debt he anticipates income taxes will up over the next several years.
Following are a few nuggets of wisdom from Warren Buffett, all of which we can find relevance in as brokers:
- It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
- Always try to go to bed a little wiser than when you woke. If you do that for a long time, you will be a success.
- If past history was all there was to the game, the richest people would be librarians.
- A public-opinion poll is no substitute for thought.
- Only when the tide goes out do you discover who's been swimming naked.
- Having integrity is the safest way to do business.
- Risk comes from not knowing what you're doing.
- Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
- The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.
- Chains of habit are too light to be felt until they are too heavy to be broken.
- Someone's sitting in the shade today because someone planted a tree a long time ago.
- In the business world, the rearview mirror is always clearer than the windshield.
Sincerely,
John C. Jensen
NIBA, President/Membership Chairman
Heritage West Financial, President
