Life is so diversified that to any statement I could make about living organisms there are exceptions. Because of the many exceptions, I should qualify everything I say with hedging phrases such as 'generally, ' 'usually, ' and 'almost always' But I'm afraid the constant repetition of these hedges will slow me down and bore you. So let's make a pact now that I forego the hedging phrases and you are to understand that almost all my statements may have rare exceptions.
This was not some pretty little girl, coyly flirtatious, delicately stimulated. This was the mature female of the species, vivid, handsome and strong demanding that all the life within her be matched. Her instinct would detect any hedging, any dishonesty, any less than complete response to her - and then she would be gone for good.
John D. MacDonald
Common hedging techniques include shorting stocks, buying put options, writing call options, and various types of leverage and paired transactions. While I do reserve the right to use these tools if and when appropriate, my firm opinion is that the best hedge is buying an appropriately safe and cheap stock.
Ben's Mr. Market allegory may seem out-of-date in today's investment world, in which most professionals and academicians talk of efficient markets, dynamic hedging and betas. Their interest in such matters is understandable, since techniques shrouded in mystery clearly have value to the purveyor of investment advice. After all, what witch doctor has ever achieved fame and fortune by simply advising 'Take two aspirins'?
As value investors, our business is to buy bargains that financial market theory says do not exist. We've delivered great returns to our clients for a quarter century-a dollar invested at inception in our largest fund is now worth over 94 dollars, a 20% net compound return. We have achieved this not by incurring high risk as financial theory would suggest, but by deliberately avoiding or hedging the risks that we identified.
The Israelites in the desert found that hoarded manna rotted. They were permitted no bank accounts and no insurance policies. God is enough. He will be tomorrow who he was today. Later, through Jeremiah (Jeremiah 2:13) God chastises Israel for digging cisterns next to streams of living water, hedging their bets just in case God forgets to be God... or neglects to be good. God is enough. Will he not be tomorrow who he has been today?
I think it should be done over, Buddy... Please make peace with your wit. It's not going to go away, Buddy. To dump it on your own advice would be as bad and unnatural as dumping your adjectives and your adverbs because Prof. B. wants you to. What does he know about it? What do you really know about your own wit? I've been sitting here tearing up notes to you. I keep starting to say things like 'This one is wonderfully constructed, ' and 'The conversation between the two cops is terrific.' So I'm hedging. I'm not sure why. I started to get a little nervous right after you began to read. It sounded like the beginning of something your arch-enemy Bob B. calls a rattling good story. Don't you think he would call this a step in the right direction? Doesn't that worry you? Even what is funny about the woman on the back of the truck doesn't sound like something you think is funny. It sounds much more like something that you think is universally considered funny. I feel gypped. Does that make you mad? You can say our relatedness spoils my judgement. It worries me enough. But I'm also just a reader. Are you a writer or just a writer of rattling good stories. I mind getting a rattling good story from you.