During his recent interview with Tobias, Zach Abraham, who runs Bulwark Capital Management and has a radio show called Know Your Risk Radio, discussed the importance of keeping your head while investing when all about you are losing theirs saying:
Zach Abraham: Yeah, I think you and I talked about that the last time I was down in your neck of the woods. I think growing up in the industry, especially the way that my dad and grandfather ran their firm, they were a brokerage firm, but they were really VC guys on the natural resource side of things. I think anybody has spent any time in markets or managing a portfolio knows the natural resources, it’s a different animal all together. They were in the middle of a … I still remember it to this day, I was probably like five and a half years, old but remember my dad walking through the door on Black Monday and the look on his face, looked like he aged like 10 years. They were in the middle of a money raise for a gold-mining project. Interestingly enough, kind of a prescient topic today. The whole deal, it blew up instantly.
Zach Abraham: Watching that disappointment, watching the downside of markets, seeing it again in a more muted fashion again in 89, the recession in the early 90s, the Asian currency issues in the 90s, the dotcom bubble, watching all that upfront, it gave me … I’m kind of old beyond my years I guess you’d say, much more jaundiced, maybe more of a contrarian perspective, just realizing that probably a bit of a short seller streak in me as well. As a matter of fact, some of my best stuff has been on the short side. Just realizing that there’s a flip side to the coin and not being enamored with the opportunity to get rich and just seeing the downside, watching the impact out of my dad and not just psychologically. There was a health impact as well from the stress of that situation.
Zach Abraham: It’s a different experience from a different angle. I think it’s kind of given me a different perspective on things.
Tobias Carlisle: Yeah that’s amazing. That’s the point that I was just going to make about you, it’s as if you’ve been in the market for a very, very long time because you … Even, you call your radio show Know Your Risk Radio. I think that it’s kind of unusual because there’s a lot of people in the market who’ve only… It’s been a ten-year bull market. Nobody has seen what happens. Not many people have seen what happens when you go through the meat grinder at the other end.
Zach Abraham: Right and I think that again with that perspective that I’ve had and it’s just kind of been a theme, right? I mean starting off in the business actually on the brokerage side of things, the day Lehman Brothers collapsed, you just had all these things reinforced. It forces you to be sober or at least it should. Hopefully you learn that lesson. My clients tell me all the time, they’re like, “Zach, you’re the oldest 37-year-old. I’m not supposed to be encouraging my money manager to take more risks.” The other side of it too and I know that you know this. You run money as well. It really is all risk management. That’s the name of the game is managing your risk, when to swing big, when to pull back, knowing which parts of the portfolio you want to expose to risk, which you don’t, how much you can afford to lose. I think those are lessons learned by scars. I think it’s especially now, like you said, 10 years into a bull market, no one’s talking about it. It’s to infinity and beyond. We refer to it as the buzz light-year market on our radio show. It’s just everything’s going to work out and unfortunately, you and I know that’s not the case.
Tobias Carlisle: To Infinity and Beyond Meat.
Zach Abraham: Yeah, yes, yeah, prescient. That’s very fitting.
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