Thursday, November 10, 2011

The "Monkees" and the Art of Investing

So I’m about 10 years old and laying in my living room watching a rerun of “The Monkees” instead of doing homework. What the hell…life is short, and this was one of my favorite shows. Although those shows seem a tad silly today, back then the Monkees to me were more awesome than the Beatles and Elvis Presley. “Hey Jude” was OK but had nothing on “Last Train to Clarksville”, and that amateur John Lennon was quite overshadowed by the genius of Peter Tork. My absolute favorite Monkees song at the time was “Look Out, Here Comes Tomorrow,” which had the great Davy Jones singing lead. Now this was back in the day before the internet, iPOD, etc. When you wanted to get a song you liked, you had to hike down to the nearest MusicLand or Tower Records and find the LP, 8-track tape, or cassette. If the song is obscure (as “Here comes Tomorrow” indeed was), you likely needed to hit multiple stores in hopes of finding then buying the whole danged album containing your song along with other crappy songs. But when you’re a moneyless 10-year old kid whose parents told you the story of their lives every time you asked for a dollar, you do the next best thing: when your beloved song comes on television, you grab a tape recorder, press it tightly against the TV with the volume up, and hope you don’t drop it on your foot the next 3 minute…all with the knowledge that if you mess this opportunity up, another one won’t come along for months if not years.

Anyway, as I’m lying there upside down on a beanbag chair watching the show, I suddenly realize this was the episode in which they sing “Here Comes Tomorrow” towards the end. I excitedly race to my room, grab my trusty tape recorder, ensure a clean cassette tape is enclosed, then park myself in front of the TV waiting for the song.

Four feet to the left of the TV is the front door, which is adjacent to a stairway of about twenty steps. At that moment, my 3-year-old sister happened to be playing at the top of the stairs immediately outside the doorway. Not taking any chances, I tell her, “Okay, I’m about to record my favorite song in the whole world, so when it starts you better not be making ANY sounds or I will destroy you.” She nods OK and continues playing.

So what happens? Just as the song starts, my sister falls down the stairs. She starts bawling at the top of her lungs at the bottom of the stairs. My grandmother runs out from the kitchen to check the commotion, and reacts as if Martians have just landed and are commencing the war of the worlds. When all was said and done, I indeed had a recording of the Monkees’ “Look Out, Here Comes Tomorrow” – with words and music completely obscured by my grandmother yelling “What’s going on here?! How did this happen?! Oh lord are you okay?! Dear Buddha!!”, my sister going, “YAAAAAAAAAAAAHHHHHH!!”, and my voice screaming “SHUT UP!!! SHUT UP!! I’M TRYING TO RECORD!! DAMN IT!! SHUT UUUUUUUP!!” That night, I recorded over my glorious composition when Shaun Cassidy’s “Da Do Run Run” came on the radio. As I was doing this, I marveled at how my sister happened to fall down the stairs at that very moment, when she could have chosen so many other more opportune times to do so. To this day, she has never fallen down another flight of stairs.

What’s the point of this trip down memory lane? The point is, shit happens, and happens against all odds and when you least expect it.

As such, the next time we as investors come across a “can’t miss / sure thing” investment and are tempted to go all in with margin and leverage, it would behoove us to take a pause and think, “Stop! Consider the story of the Monkees’ ‘Here Comes Tomorrow’ and Doodah’s tumbling sister.” Hopefully, we can avoid potentially finding ourselves in the sad situation some overly optimistic Elan and Dendreon investors found themselves over the recent past.

Happy (and prudent) investing to all.

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