WASHINGTONA few weeks ago, I shared with my colleagues at The Washington Post Writers Group my wish to discontinue writing my column because of some changes in my personal life, about which more in a moment. I have nothing but gratitude for their hospitality the past five years and hope to re-establish a relationship in the future. It has been a delight to bring to readers in various countries my views and emotions regarding the vicissitudes of international affairs.
In 2008, years of financial irresponsibility on the part of government, credit institutions and consumers came to a head, causing a debacle perhaps comparable to that of 1929. Like almost everyone else, my personal finances were hit; it took a long while for them to recover. I emerged from that experience with the conviction that ones savingsin my case the fruit of years of writing books and articles, giving lectures and doing radio and televisionare too important to leave to the experts. Finance is one of those rare fields that no one can afford to disregard entirely. As a humanist who likes to bring different disciplines to his outlook and mistrusts excessive specialization, I have always had an intellectual interest in the world of money. The crisis refined my interest.
In my search for answers to the question that financial bubbles have posed for centurieswhy does the system lead to recurring credit excesses and crashes?I confirmed something about which I had an intuition but not a conviction. The world would be much less insecure, and everyones personal savings more protected, if we all practiced something akin to the school of investing founded by Benjamin Graham in the aftermath of the 1929 crash, and followed with decency, prudence and stellar results by a host of contrarians of whom Warren Buffett is only the most famous. It is sometimes called the school of fundamental analysis or value investing. Essentially a conservative approach, it bases the buying and selling of securities on an old-fashioned, skeptical study of the assets and income of individual businesses rather than on macroeconomic factors, anticipatory views on the stock market, fashionable acquisitions or hot tips and other short-term considerations.
In the long run, securities will be priced reasonably in line with the fundamentals of a businessits solvency and ability to generate profits by satisfying customers. But in the short run, the bipolar tendency of stock markets to reflect alternatively the euphoria or the depression of investors creates opportunities to buy a dollar with 50 cents. Almost a century of excellent performances by individuals who paid attention to fundamentals, while others did not, vouches for the intellectual integrity and soundness of value investors.
I have, in the past few years, started to invest my own savings by following their teachings and to an extent have helped my family do the same. This is not a professional pursuitI just want to protect myself and my tribe from future bubbles and the helplessness that comes from not fully knowing what others are doing with the fruit of our labor.
Since I want to devote some serious time to this, I have taken a sabbatical from some of my activities. I will not give up my journalism and other writing; my wish is to combine them along with investing in a way that is feasible and personally satisfactory. I had not planned on reshaping my life at 45, but I want to be fully cognizant of what is coming the next time the monetary excesses of government, the erratic behavior of banks and the wantonness of Mr. Public produce another crash. I also crave for the sheer intellectual pleasure of understanding how individual businesses work in various industries and why one should or should not invest in them. There is something riveting about the angels and demons of human nature, the market economy and modern society to be learned from this kind of study. I hope to write about it someday.
While I make the personal adjustments that will allow me to resume my old activities while preserving an important space for this new baby, it would not have been appropriate to renew a long-term writing agreement. You deserve from your columnists an unqualified commitment I could not, in all honesty, continue to honor in the near future.
Hasta la vista.