In a period in which capacity is very difficult to find and pricing is extraordinarily strong, it is important for shippers and carriers to remember this simple lesson. It is relatively simple, yet profound. It is a well-worn axiom in the investing world that “the most expensive thing on Wall Street is an ego.” It’s true in the world of investing money, but it’s true for the rest of the world as well. “What does this mean? What is he trying to say?” you may be asking.
When I start to sell an investing idea, inevitably I’ll get asked, “What’s the counter argument? What could go wrong with your thesis?” I know that if I can’t answer that question, I’ll get dismissed very quickly. Everyone with any experience knows that there is no such thing as a sure thing. That even the best investing idea with the most outsized returns will someday run its course and a new follow-up investing idea will be needed. Times change, factors change, valuations change, and your ideas have to change as well, without forgetting where we came from.
Today, the power is in the hands of the asset or service provider, but this won’t last forever. It is important for asset or service providers to remember three things:
1. How did that customer conduct themselves when the roles were reversed;
2. Remember that customers will remember how you conducted yourself when the roles are reversed again;
3. Stronger long-term relationships can be forged, if you take care of shippers who took care of you when capacity was abundant.
This simple lesson also applies to your daily life. Ask yourself. What is it that you are doing in your personal or professional life, that is staid, that is no longer working just because the times have changed and you’ve failed to change with them? Whether it is deciding what is the right thing to invest in, or what is the right car to drive, or whether to rent or own your home, or what is going to be the most fashionable thing to wear next summer. What was the correct answer last year won’t necessarily be the right answer next year. “But I’ve always loved…” is investing with your ego and only gets in the way of being ahead of the curve in anything you do. Don’t get me wrong, I once looked great in my white three piece knit suit, but then again so did John Travolta in 1977.
When I sit down with the most successful mutual fund, hedge fund, and pension fund managers I know, we usually spend the first ten to fifteen minutes catching up on our latest outlook on the economy, our latest theories on which industry sectors will benefit, which companies in each of those sectors are best positioned to take advantage of those trends and which companies do not have that potential already priced into their stock. In short, what is happening in the economy, who is going to benefit, and what’s the best way to invest in it. We then spend the rest of the meeting (45 mins to an hour plus) discussing how we could be wrong, pondering what we might be missing, and carefully dissecting how the current situation is similar to previous times and what mistakes we made in those circumstances. We know we are smart, well educated, and have spent countless hours studying the companies we are investing in. We also know that hundreds of other smart, well-educated people have done the same. So, if we are going to win, to get an edge at investing, we need to see something/understand something that those other smart people have missed. We need to understand how we can be wrong.
Over time I’ve developed the following way of coping with this by repeating often (almost mantra), “Talk to me for 5 minutes and you’ll think I’m a know it all. Talk to me for more than 15 minutes and you’ll realize I know nothing. I have a thesis on everything, but I know nothing. If the data keeps coming in and it supports the thesis, then maybe I have the right thesis. If not, then maybe I need to change the thesis.” It is as simple as saying I know nothing. My ego isn’t invested in this idea being right or wrong. So, when data starts to come in that is counter to what you believe, you can simply change your thesis, and don’t get caught in that very expensive trap of defending a flawed thesis.
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