102 THE INVESTMENT TEAM
Lions may become an endangered species in the financial world
if the markets continue to morph and lions hold fast to their old
ways. However, lions will look like heroes if the astronomic valu-
ations fall apart and the “old” rules are restored. And, of course,
those different opinions are what make a market.The Rationalist (NT): The Wise Old Owl
View of the market: “It’s a challenging puzzle to be solved.”Rationalists are like wise old owls, hovering in the air, seeing
the big picture. They integrate both left and right brain, critical
thinking and creative ideas. Therefore, they are excellent strate-
gists and model builders. Their investment strength is creative
analysis and their style is often a mix of value and contrarian in-
vesting. They like to work with models—dividend discount and
factor models in particular—and to hunt for out-of-favor, under-
valued merchandise. Ralph Wanger is an owl. He likes to work
with investment themes; that is, to start with the big picture and
work down to individual stocks. Warren Buffett and Charlie Munger
may well be owls, too. They are fiercely competitive, pragmatic,
and contrarian. The owl’s likely role in an investment firm is as a
strategist, economist, or analyst.
What are the owl’s possible weaknesses? Some owls may hover
too far above the investment scene and therefore lose touch with
reality. We all know investors who were way ahead of their time.
In the 1980s, a popular theme was rebuilding the infrastructure of
America. Analysts recommended cement companies as obvious
choices, because roads and bridges were being rebuilt in huge
numbers. As sound as the reasoning was, the money never seemed
to show up in the earnings of the cement companies and their stocks
drifted, yielding unexciting returns.
Unlike the traditional lions, though, owls can usually shift and08-13 ware 102 1/19/01, 1:11 PM