Will changing lanes while driving actually improve your performance, or get you closer to your goal faster?
I often feel stymied when it’s time to put something on the website. It’s like being at a party, and someone says, “Tom, you are so funny, please tell us a joke.” It’s tough to produce on the spot like that.
I thought of a fantastic topic for this post. With clear analogies and references every man, woman and child could understand. When mentioning it to Brendan, he sat back in his chair and remarked,
“You know, Dad, there is a name for that (Etorre’s Observation) and for that matter, you should also know there is a well-known post about that very topic, with examples very similar to the ones you cite, written by Howard Marks.”
Oh. Well, so much for that idea.
The observation I made (while driving to Hilton Head, SC), was “look at all these knucklehead drivers, zigging and zagging. Changing lanes and causing potential risks for everyone around them. And for what? There is a good chance they will wind up next to us at the same red light on the exit ramp. Was it really worth all that movement?”
That got me thinking about all the folks that want constant change in their investment accounts, just like changing lanes. “I see this fund moving faster than what we currently have. Let’s change to that one.” Or, this, “The markets are crazy now. But when the markets calm down, let’s think about getting back in.”
Here is the link to the Howard Marks letter, written in September 2002. It perfectly captures what I wanted to write about! I encourage nearly all investors to read this (and nearly everything he writes about): https://www.oaktreecapital.com/docs/default-source/memos/2002-09-04-etorres-wisdom.pdf?sfvrsn=2
In the meantime, don’t bother changing lanes. Stay on the course you set out for, and don’t deviate from it. It’s in deviating that we get knocked off course.
Incidentally, Etorre’s Observation states “The other line moves faster. This applies to all lines – bank, supermarket, tollbooth, customs and so on. And don’t try to change lines. The other line – the one you were in originally – will then move faster.”
– Barbara Ettore, Harpers Magazine, August 1974
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