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Subject:  Investing Like a Trout Date:  2/17/2002  2:09 PM
Author:  imcharliehm Number:  3115 of 36217

Weekend mornings, when markets are closed and the daily hysteria of Wall Street has faded away, when it's still dark and quiet outside and covers are warm and snuggly, are good for thinking about the larger, more important things of life, like trout fishing and past times spent on lakes or streams, casting to rising fish. Classically, trout fishing is dry fly fishing in creeks and rivers, but for me it was small lakes, almost ponds. Late afternoons, as shadows lengthened toward early evening, we'd slap on enough bug juice to thwart mosquitoes and row to where the fish were working, flip for bow or stern position, and begin an hour or two of casting flies as fish fed on the surfacing hatch.

Not much to do with bonds in that picture, but consider another one. You're a trout who lives in waters such as W.D.Wetherell describes in his collection of fishing essays, "Vermont River." When you're hungry, you don't drive to the grocery store. You move from your resting station that is sheltered and away from the current, to your feeding station, perhaps the downside edge of a mid-stream boulder deposited there in the last ice age, and you begin to watch the conveyor belt of objects floating past you, selecting between the debris carried from land to water by wind and the truly tasty stuff also fallen there. If you're an experienced trout, you know bugs from things that might look like bugs, and ignore that #12 Gray Drake that guy in waders just drifted past you, and sip instead a true Siphlonurus from the surface and ease back to your station.

Such a picture describes late spring or early summer, when the raging, disclored, winter floods have receded and the river has resumed what we, as fishermen, think of as its normal pace and rhythm. But the whole cycle of the river, from January's floods to August's low waters, is the cycle of the river, with each year's cycle being a variation of previous ones, and Wetherell does a good job of capturing the misery of cold, wet days when wading was foolhearty, as well as the blistering, hot days of July, when fishing was equally a waste of time.

It occurred to me this morning, still snuggled in bed, that fishing for trout according to the rhythms of nature and the seasons of the river had a lot in common with buying bonds, which also have their seasons, driven not by rains but interest rates, and not annually, but in longer, waxing and waning, but recognizable and repeating cycles of 4 to 5 years.

Trout don't buy bonds. People do, but how would a trout buy bonds if he were to? My guess is that he'd accept the fact of rhythms and seasons and cycles and wouldn't go charging into the full current of the river at just any time of year, madly chasing after every apparent opportunity that floated by. Instead, he'd choose a feeding station, out of the buffet and torrent of daily events but at its edge, and patiently watch the conveyor belt of market events bring the opportunities to him, selecting those he recognized as genuine, rejecting those that were merely fancy feathers and a hook.

One could argue that bonds are as varied in their kinds as are fish, and the methods to pursue the individual kinds of each must be as individually chosen. But emphasizing the admittedly event-driven, equity-like nature of junk bonds, for example, over the fact they do relate to interest rates, however complexly, ignores the forest for the trees and loses the main value of the metaphor, namely investing is about the long haul, about history and patience. And right now isn't the Spring of the year for bonds.

Go fishing instead. Charlie
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