STREET DOGS: Investment lessons from a naval man
Portfolio managers have had to look for such changes as globalisation, derivatives and the overwhelming dominance of markets, writes Michel Pireu
Alfred Thayer Mahan, through his text, The Influence of Sea Power upon History, became the world’s most influential naval strategist," says Charles Ellis in Lessons in Grand Strategy. "Mahan’s principles came to dominate the policies and strategies of the leading nations’ navies, much as Warren Buffett’s principles dominate institutional investors’ portfolio strategies today. "Investment strategists can profit from studying the lessons of Captain Mahan and the reasoning behind them," says Ellis. "A navy is by nature an attacking arm, and so is an investment portfolio. There is no hiding place on the open seas or in the stock or bond markets. Thus, a leader in either realm must accept the sea and weather or the market as it is and always be thinking about the offence." Mahan’s first dictum was always to maintain a "shield of defensive power". Wise investors appreciate how important it is, as a first priority, to establish a vigorous defence — deliberate and assertive, not "defensive"...
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