In early 2009, I attended a townhall at McKinsey. This was just a few months after Lehman Brothers’ bankruptcy, and the US was still in the midst of a horrible recession.
The partners running the meeting assured us that all was well – in fact, McKinsey did not lay off a single person during the recession! The Firm took such amazing care of its members.
After these preliminaries, the Q&A started. So, one of us asked a partner from the financial services practice as to why were we not advising our clients to invest? This was such a great time – every stock was beaten to pulp.
I will never forget his reply. He said, “The clients say, we are willing to invest if we know how deep the hole is. But we can’t put money into a bottomless pit.”
The problem is that nobody will tell you how deep the pit is – as a fund manager, it is your job to take that call. In fact, if you wait for clarity on how deep a pit is, everybody also would then have the same clarity. When the danger is gone, the opportunity is also gone.
In fact, just a month after Lehman Brothers’ collapse, Warren Buffett wrote in The New York Times – “By American. I am.” And he bought Goldman stock worth $5 billion.
He did not say, “First tell me how deep the hole is.” In fact, after his investment, Goldman stock kept falling. But it came back up, and he did quite well on the investment.
This post is not just about investing – it is also about conviction. Be it investing or any domain of life, what makes us special is our convictions, and whether we will stand by them when everyone else has quit.
I am not saying be foolhardy or take arbitrary risks. But if you want to stand out, you need to have some convictions.
That is what separates people who do change the world, from those who just keep wanting to.
– Rajan
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