What to take credit for

In Hemingway’s The Old Man and the Sea, the character Santiago has gone eighty-four days without catching a fish. The village considers him finished - it was time to put him out to pasture, so to speak. Still, on the eighty-fifth morning he rows out before dawn and sets his lines at exact depths - forty fathoms, seventy-five, a hundred. Although it is better to be lucky, he would rather be exact.

I spent sixteen years investing across global emerging markets, a profession built on similar arithmetic. There were long stretches of nothing, occasional abundance with passages of something in between. The hardest part was that there was no reliable way, in the moment, to tell whether the nothing was a verdict on my method or simply the water I happened to be fishing in at that particular point in time.

Also, I have to be open that my accounting was often flawed. When a position worked it was judgement based on experience from more than a hundred trips in-market over the years. And when it failed it was just macro, or politics, or timing.

Whilst I’d love to think it was the sea, not the fisherman, the honest version is closer to the reverse. Most outcomes in any given year are the sea and the only thing that was ever really mine was the depth of the lines: the work done before the fish arrived.

Eighty-four days was a long time for Santiago and in markets it translates to years. I have sat in front of clients in year three of nothing, holding a process I believed in, unable to prove it. I have also sat in the same rooms after a bumper period, being congratulated for the sea. Neither room was focussed on the lines.

And there is a detail in the story that matters more than any of this. Santiago did not fish where the villagers fished. Whilst the other boats worked the near water closer to the harbour, with the small fish that produced more to sell quickly, he rowed out past them all, beyond sight of land, into unfished territory. So the eighty-four days are not bad luck per se. They are the price of the far water he has chosen to fish in.

The currents and the deep wells and circling birds mean opportunity. His eighty-four days have told him nothing about the sea’s abundance, only about his share of it so far. Today, investing in a particular part of the market can feel the same, particularly if you are a boutique firm in a certain part of the sea. He needs to maintain conviction about the water and agnosticism about the fish until the line goes taut, which is easier said than done.

The story goes on. Santiago hooks a great marlin and fights it for three days, and because the fish is too big for the skiff he lashes it alongside, and the sharks eat it on the way back to harbour anyway. The exactness was never a guarantee of the villagers giving him respect. It was, however, only ever the part he could control.

None of this argues that it doesn’t matter if you catch the fish. The village is right to count fish - fish are what fishermen are for, and returns are what investors are for. The claim is narrower. In any given year, the catch is mostly down to the sea but the lines are the part of the outcome that is actually yours.

And so, whilst it is better to be lucky, luck cannot be chosen. Exactness can.