Story Intact Then Double Down, Story Broken Then Walk Away
Books Teaching This Pattern
Evidence
Julian Robertson - A Tiger in the Land of Bears and Bulls
Daniel Strachman · 4 highlights
"The key behind all of the firm's investments was the story. If the story made sense, then the investment made sense. If there was no story or it was not easily understood, then it had no place in the portfolio. When the story changed, the investment had to change as well—it was and is all about the story."
"Robertson's mantra was, as long as the story around the in- vestment remained the same, the position should get bigger. As soon as the story changed, it was time to get out. His traders and"
"philosophy. In order for something to have a perceived value and be worthy of being in the portfolio, Robertson had to un- derstand the idea's story. If the story was built on solid research, Robertson would stick with it, riding out a storm and maybe even adding to the position as it was going against him. Often, he eventually reaped the benefits of his convictions. As long as the story was simple, logical, and it made sense, he would stay with it. However, once things became complicated, or the underlying story changed, he would lose his faith and conviction, admit that he was wrong, and get out."
"To understand the concept of story, consider this example. Say you are interested in a solid oak wooden table. The analyst could tell you that he had checked oujt the market for tables, evaluated the information, and come to the conclusion that the table was a good buy at $ 100 because it was well made, solidly built, and would not fall apart. This is the story. So you go to the shop, prepared to buy the table. And then, just as you are run- ning your hand over the table, a corner falls off. Well, now the seller is desperate to get rid of the broken table and is willing to sell it for $20. To the analyst, this seems like a steal. He sees an incredible opportunity to buy something for $20 that is really worth $100 and needs just a bit of fixing to get it there. But in Robertson's eyes, the story is now flawed, and now he would say that you should want no part of the deal. How could something"