Timing: The Mark of a General

The mark of an elite general is that he has an impeccable sense of timing.

=========

As the market is in uproars and the Corona/Covid-19 virus is causing widespread panic, it seems pertinent to address the issue of timing.

Now might be as good a time as any to sell if you’ve had large capital gains over the past couple of years.

They say you should not try to time the market, but all my worst losses have come from not selling fast enough. A simple rule of thumb from the book Zurich Axioms single-handedly helped me realize this a few years back:

Gerald Loeb’s rule of thumb was that you should sell whenever a stock’s price has retreated 10 to 15 percent from the highest price at which you have held it, regardless of whether you then have a gain or a loss. Frank Henry gave himself a bit more leeway and said 10 to 20 percent.

Most seasoned speculators operate with very similar rules. In all cases, the idea is to cut losses early. You take small losses to protect yourself from big ones.

A situation that goes bad will stay bad, at least for a while.

“You take small losses to protect yourself from big ones.”

On another note, a friend told me something interesting. He said: “Now is the confirmation period; all the bullish people will rationalize it as a speedbump, and all the bearish folks will claim it’s the inception of a correction.”

What about the risk-averse individuals in the middle? They’re quiet.

=========

For some of my projects, I had good timing. Others not.

My timing for this website was good enough (7/10) and my timing for 25 Minuter (the Swedish podcast) was great (8.5/10).

I had great timing with 25 Minuter, but it was not of my own doing, I was recruited for it by Mikael. So I can’t take credit. Still, it is the only podcast of its sort in Sweden. It has been emulated by others, but they failed.

The concept of Future Skills is good and continues to be relevant. But I wish we had been 2 years faster. It would have been huge.

Had we started Future Skills instead of 25 Minuter — in English from the get-go, I think we would have been one of the top 50 shows in the world.

Of course, this would’ve been impossible because we did not have the market knowledge or the practical know-how at that time. So it’s a moot point. Don’t cry over spilled milk. Similar to how I was ranked #17 in Europe at 4vs4 for Warcraft the Frozen Throne, and #21 at 3vs3. When I was 14 years old. 1

But I quit. I was so discouraged by my defeat that I quit. Instead of practicing further. Perhaps I could have been a pro-gamer. But that didn’t happen.

Don’t cry over spilt milk. But do analyze why you quit for the wrong reasons.

BOOH is good and has been appreciated by great people. But I’ve been slow to follow up (like Berkhan with IF).

That’s how the world goes.

In the meantime:

Let’s look at 3 interesting individuals who were not just geniuses, but also had an impeccable sense of timing.

  1. Napoleon
  2. Henry Singleton
  3. Steve Jobs

Trump’s timing for the U.S presidential election earns an honorary mention.

Napoleon’s Coup d’Ĺ“il

Napoleon is probably the most universally gifted human being. He was in the top 80-90% of just about everything–except social skills and economic policy.

But, above all else, was his natural ability to make spur-of-the-moment life-changing decisions. And this skill could not have come to better use in the tumultuous period of the French Revolution, where one man could stand on top of the social hierarchy one week, and be guillotined or exiled the next. Few mastered this better than Napoleon or Talleyrand.

The first of these moments was Napoleon’s decision to go all-out and quench an upcoming revolution. He put down the mob swiftly by firing Grapeshot (the early version of a frag-grenade) at them. That one thing put Napoleon on the rest of his trajectory. Everyone was hesitating and he took the rudder.

Then there were many moments (in his bigger battles) where his timing of one or two attacks made all the difference between victory and defeat. Like running over the bridge or the cannon balls that saved Jakob Walter.

Furthermore…..

Frederick the Great was known for his ability to size up a battlefield by a brief glance, but Napoleon learned from him and did it better. From my book:

The coup d’oeil may be reduced to two points; the first of which is having the ability to judge how many troops a certain extent of country can contain. This talent can only be acquired by practice, for after having laid out several camps, the eye will gain so exact an idea of space, that you will seldom make any material mistake in your calculations.

The other point, is to be able to distinguish at first sight all the advantages of which any given space of ground is capable. This art is to be acquired and even brought to perfection, though a man be not absolutely born with a military genius.

 

Henry Singleton’s Contrarian Capital Allocation Decisions

Henry Singleton was one of the youngest to join the Naval Academy, one of the best mathematical minds in the U.S, a winner of the Putnam Prize, and a chess player with a ranking just below Grandmaster. It’s safe to say he was not a fool.

For Teledyne, he started out acquiring a wide range of niched industrial production companies (using Teledyne’s overpriced stock as currency to pay for it). This was in the early days of company acquisitions, and he had few competitors vying to outbid him. So it worked great!

Then he improved the companies acquired. This was done through decentralization, improved accounting, and focusing on free cash flow.

Basically, he was trying to get more money into the bank account.

When Teledyne’s share price dropped (as measured by P/E) he decided it was far below intrinsic value and he bought it back aggressively (sometimes financed by debt), at specific points in time over several years when he felt it was good timing.

Finally, when that stopped paying off, he refocused the company structure; from a sprawling conglomerate of 100-160 companies, to a focused holding of merely 5 companies.

In case you are not familiar with how large companies operate, this is very uncommon. Henry was an extremely individual thinker.

That’s why he is so interesting! 2

The process went something like this:

Acquisitions > Cash flow and profit margin > Stock buybacks > Focused investing.

Each of these periods were a big change in direction. Not something that happened overnight.

Henry Singleton made a few big decisions and then stuck to it for years (5 average) before making another one.

Henry Singleton was an elite general.

He might not have timed the market perfectly, but he came close– because he got the timing right for all his big strategic decisions. Averaged over 28 years, he had 20.4% returns per year. This is incredible. A dollar invested with Henry Singleton in 1963 would’ve been worth $181 by 1990.

Two years before dying from brain cancer, Henry said, in response to share repurchases:

If everyone’s doing them, there must be something wrong with them.

1997 — Twenty-Three years ago — and it’s gone full circle. A new generation is here. That could explain why share repurchases have been a big thing over the past years, as a tactic to boost share prices.

It’s too bad Henry Singleton is not easily available. He had a secret, private life, and no one knows much about him.

Steve Jobs Introduction of Products

Who are the best marketers in the past 20 years? Possibly Steve Jobs, Elon Musk, and Donald Trump.

The Lisa may have failed, but most of Steve Jobs’ other big concepts struck gold. From the Mac to Pixar to iPhones and iPads. Each of these seem obvious in hindsight, but let me do a noob-review of each one:

  • Lisa: Failed due to timing and increasing competition.
  • Mac: It was a continuation of their previously successful concept. 
  • Pixar: It was a new industry, and clearly, Steve Jobs knew where it was going before others did. Possibly he also foresaw the acquisition from Disney or some other big one.
  • iPhones: Same as Pixar. Steve Jobs saw ahead and had the best timing. In terms of technologically bringing it together.
  • iPads: I still don’t understand why people buy and use this. Possibly because it’s a compromise solution?

I may be very wrong on these, so feel free to correct me.

_____

Final thought: In hindsight Napoleon, Henry Singleton and Steve Job’s decisions appear obvious and prescient. Not contrarian and revolutionary. But if everyone had thought that way, they wouldn’t have been big winners.

Conclusion: Timing matters greatly.

Question: How good/bad was your timing for your latest couple of projects?

 

Bonus Picture:

Some have said Alexander had the best timing of all Generals.

  1. We played the Europe Champions in 3vs3 (Mania (and two more super-talented people) and lost. When I watched the replay, I saw that we lost only because of their harassment. If we had attacked them within that 5 minute gap (out of 20-minute game) we would have won easily. I destroyed my keyboard after that and never played again. Instead I bought WOW, went full-nerd and became the #2 Warlock on my server to get an Elite Steed.

  2. There are investors who have a better track record. Like Stanley Druckenmiller and Walter Schloss. But they are not as cool, I think.

Join my Newsletter

Receive updates on new articles and things not shared elsewhere.

Comments

  1. > I may be very wrong on these, so feel free to correct me.

    Lisa: $10,000, wasn’t reliable or customizable (built using technology from Xerox Parc, Job used Apple’s shares as a means to gain access).
    Mac: $2,000 (reasonable) but could not be customized/extended.
    Pixar: Original computer division of ILM. Jobs bought from George Lucas, eventually sunk $50m into it. The plan for Pixar revolved around selling their Pixar Image Computer + Renderman software. It was only after both of these failed that they switched to making films.
    iPhones: Culmination of several things. Firstly, their success with the iPod gave them the momentum+confidence to pursue it (technologically), and secondly, it had been in demand for a LONG time… it was just no one had the temerity to get the recipe right. Remember, iPhones originally didn’t support 3rd party apps, so it wasn’t the home run most see them as today.
    iPad: It’s meant as a content consumption device. If you’re an architect, travelling to see a client, and need to brush up on your pitch, it’s meant as a tool to do that. I think they serve their purpose, but the market needs a strong competitor.

    > My timing for this website was good enough (7/10) and my timing for 25 Minuter (the Swedish podcast) was great (8.5/10).

    Respectfully disagree – I’d suggest this underlying premise (whilst correct as an observation) is symptomatic.

    My perspective is that you are a success because of you. You made the decision to track your personal development, providing insights to your fans through this site. Anyone could have done this, both back at the time you created SGM, and today. The timing didn’t matter as much as the content.

    The growth you received, matched with Mikael’s perspicacity, made the podcast a success. On a sidenote, you + M complimented each other perfectly for it – M needed a means to grow his name, and you needed some way to capitalize on your online success. I believe the podcast achieved success because of 80% personality, 20% content.

    This is demonstrated with your continued ability to have great guests (which, IMO, was your primary competitive advantage).

    The timing may have worked, but was secondary.

    I would assert it was similar with Napoleon + Jobs (haven’t read up about the other guy). Napoleon won because he was just ahead of the curve. Using Artillery at Toulon, splitting his army into Corps, using Caesar-like speed to divide and conquer. It had been done before, but not with the ferocity Napoleon employed.

    Job was slightly different. The original gamble on Apple was lucky. However, what makes Jobs so important is that he was primarily responsible for the monumental growth of the business post 2000. This was due to a singular focus on the creation of great products, which served their purpose with ruthless efficiency. Timing was pertinent, but not the cause, of the success (PDA’s + Tablets had been around since the mid 90’s + iPhone wasn’t the first smartphone).

    > How good/bad was your timing for your latest couple of projects?

    In the UK, our lottery’s motto is “you have to be in it to win it”.

    I believe what you attribute to timing is the ability for someone to apply their personal equity to a market/situation. The quicker + more steadfast they are in dong this, the more growth they achieve.

    You have increasing personal equity, which I believe will compound over the next several years. I think the next 5 years will put you in a VERY enviable position, both professionally and personally. That isn’t timing, it’s a result of what you have done for the past 5.

    > Some have said Alexander had the best timing of all Generals.

    Again, would, respectfully, disagree. After defeating the Persians, Alexander lost his way and ended up fighting in India for no other reason than his own ego.

    His invasion of Persia was really his father’s invasion of Persia, so perhaps if he hadn’t died, we’d be celebrating Phillip the Great.

    In terms of tactics/strategy, Alexander employed the same each time. It’s known as the Hammer + Anvil, in which an enemy is pinned with a frontal force (anvil), and a more mobile contingent (typically cavalry) is used to outflank them (hammer), hitting them from the rear.

    Alexander’s father’s introduction of the Phalanx gave their army the anvil, the Companion cavalry became the hammer that Alexander personally lead. I suppose the real value Alexander brought was God-level confidence… which eventually got the better of him!

    Thanks again for the great insights, hopefully my comment added value.

    • Hello,

      “Pixar: Original computer division of ILM. Jobs bought from George Lucas, eventually sunk $50m into it. The plan for Pixar revolved around selling their Pixar Image Computer + Renderman software. It was only after both of these failed that they switched to making films.”

      –That’s interesting. I did not know that.

      “iPhones: Culmination of several things. Firstly, their success with the iPod gave them the momentum+confidence to pursue it (technologically)”

      –Re culmination of several things: Tony Fadell has said it was the culmination of multiple technologies reaching maturation. And then it became feasible (profitable). I tried finding a good link, but came up short. I read this in Walter Isaacson’s book about IT entrepreneurs.

      “(technologically), and secondly, it had been in demand for a LONG time… it was just no one had the temerity to get the recipe right. “

      –Speaking of this, I recently read an article from Bill Gates, where he said the following:
      Gates: Difference between phone and PC is size of screen and input technique. The next generation is either a screen that you can fold out to any size you want, like a scroll, or more likely it’s simply projecting on to your retina. If I have a projection ability. Eventually going to laugh at weird contraptions called screens. All you’ve got to do is put something on your eye.

      ” It had been done before, but not with the ferocity Napoleon employed.”

      –I believe it’s because (1) no one put it together like Napoleon did at the time (and keep in mind information was 100x more scarce/hard to pursue at that time). (2) The generals of most other countries were old and stuck in a rut. The Corps system took them by surprise, until Russia.

      “I believe what you attribute to timing is the ability for someone to apply their personal equity to a market/situation. The quicker + more steadfast they are in dong this, the more growth they achieve.”

      –I would suggest:
      1) you take a look at the adoption curve: https://en.wikipedia.org/wiki/Technology_adoption_life_cycle
      2) you consider the past 100 years of media. Timing really does matter.

      You are probably right about Alexander.

      • “Projecting onto your retina”? Unless he’s talking about some nerve-grafting cyborg crap that is still strictly science fiction, that means – a screen.

      • Thanks for reply!

        > Re culmination of several things: Tony Fadell has said it was the culmination of multiple technologies reaching maturation

        Maybe. Tony Faddell got ousted from Apple (partly) because he’s a loose cannon. Him and Scott Forestall didn’t get along, so it may not be prudent to take what he says as objective.

        > I tried finding a good link

        https://9to5mac.com/2017/06/25/iphone-original-interface-creation-interview/ -> “Forstall explains that one of the factors that played a role in the iPhone’s creation was the idea of the iPod and what Apple thought could eventually cannibalize the device’s sales in the long term.”

        This corroborates both sentiments; technology was maturing and they felt cell phones may usurp iPod marketshare + they wanted to capitalize on iPod’s success.

        My point is the biggest deal with iPhone was that it had a desktop-level OS. This is really what made it work (along with its braindead simple UI) – Blackberry, Dell and the other “technology” companies had ample opportunity to slap a touchscreen on their devices, or (in the case of Dell), a SIM in their PDA’s, and call it a phone since the 90’s… but didn’t.

        If you want a good demonstration of this, take a look at the infamous “iTunes phone”, which Apple tried to sell in partnership with Motorola (2 yrs before iPhone was released): https://www.youtube.com/watch?v=TWSRgsk2oaw

        Maybe that phone failed because was too late to the market? Would you not assert this was less to do with timing, and more to do with shitty product design?

        > read an article from Bill Gates

        Peter Thiel characterized technological progress (IE market value) as the ability to “do more with less”. This is evident with the PC, smartphones and a number of other products.

        The problem with what Gates explained is that it supposes the core benefit of compute power is accessibility. Thus, more accessibility provides more value. I believe this to be incorrect.

        The most effective definition of compute value comes from a video I perused the other week: https://www.youtube.com/watch?v=JhHMJCUmq28

        “For most of our history, human technology consisted of our brains, fire and sharp sticks. While fire and sharp sticks became power plants and nuclear weapons, the biggest upgrade has happened to our brains.”

        “Since the 1960’s, the power of our brain machines has been growing exponentially, allowing computers to get smaller and more powerful at the same time.”

        The value of compute technology lies with what you can *do* with it. This is evidenced well with this blog – the ability for me to type messages to you is what provides value to the technology. Putting that on my eye won’t make it more valuable.

        > I would suggest:

        I know about both of these things. I’m not suggesting you’re incorrect, just that I don’t think timing lies at the core of what you’re alluding to.

        If you take what you postulated from the stance of a spectator (or “investor”), then, yes, “timing” is key… but if you are one of the people creating the products/tools/services, then timing becomes secondary to your own momentum/skill/insight in making it work.

        Thanks again

  2. Investing is the best. Keep practicing until you gain a feel for it. Don’t let the numbers discourage you.

  3. Every speculator is, to some extent, trying to time the market. Anyone who only bought stocks based on their realistic potential to pay future dividends would avoid the current stock market like a trainload of Ebola victims.

    Jobs was certainly successful, but how much was timing? Did he ever delay the introduction of a product because it was too early, or was he just good at seeing opportunities before others did?

    Napoleon’s timing in strategic warfare was not so successful after Jena. He engaged the Royal Navy too soon, waited too long to tackle Russia, and too long to give up on Spain. But tactically, he was a genius – what kind of battle would Waterloo have been if BlĂĽcher had been present at the outset?

    But in strategy, persistence and leadership often matter more than timing. BolĂ­var made numerous premature attacks and lost battles and whole armies, but was able to recruit new ones. The Continental Congress declared American independence in 1776 without any military plan.

    I’ve never had a project that was anything but horribly timed, but I have a long established habit of doing what I feel like. I’m not rich, but… I do what I want.

    • Hello Abgrund,

      On the market: I agree with you. But do you know of any alternative investments or small cap stocks that could be good over the next 5 years?

      On Steve Jobs: I think he was good at seeing opportunities before others did, as you say. That was his main thing — in terms of products.

      On Napoleon: He should have avoided Russia. And he probably should have avoided the navy to begin with. Based on my understanding, his talent was confined to land. Still, he helped inspire the idea of canned food while engaged in that project. So at least something good came out of it. As for the rest of it, I think you are disregarding all the things that made him so famous. He won a lot of battles with ease; battles no one expected him to win. And that’s why he even got to Italy, Egypt or Jena to begin with. I thought about it, and I don’t believe his timing necessarily was wrong, but rather that he was occupied with too many things (not focusing exclusively on war). I could be wrong, but attribution in hindsight is tough.

      • No, I don’t. Five years is a speculator’s time frame. If I were a gambler, I’d pick the sexiest companies and short them – but I’m not a gambler.

        It’s like this: if a company is adored, if it’s supported by fads and media and pop culture, if it’s greentarded or pseudo-techy, or sucks up to shit-of-the-day movements like queerism, it will be overvalued because sheeple will talk it up and even bid it up if they have any pennies left over from buying free-range celery. But there’s always a risk; any of these parasitic phony enterprises could be bailed out by government, perhaps many times over. And some may succeed for a while just by ripping off those same idiots.

        I think gold is outrageously overvalued, but the reason is that people want a safe haven from the madness. What else is there? If anything was predictably valuable, it would already have drawn the “safe” money, and become overvalued and hence unsafe. There are things that will be predictably more valuable in the future (like land), but in five years? Roll the dice.

        I don’t think Napoleon could have held on to central Europe for long with Czarist Russia working against him, and with the English blockade. But, as you say, attribution in hindsight is tough. His early victories, in any case, were a matter of (strategic) timing only in that he struck before his enemies were either prepared, able to raise mass armies by conscription, or even expecting him to attack. Egypt turned out be a mistake in the long run. Napoleon was good at winning battles, not so good at perceiving strategic realities.

      • Actually – one thing that might be undervalued today: tobacco. In the U.S., tobacco is Satan and if you invest in it you’re worse than a puppy molester. But I bet the total number of smokers in the world is still going up, and even the U.S. can’t actually ban tobacco because of the tax revenue it produces. Any attempts to restrict cultivation will drive the price up.

        There are other “ugly” investments I think are good, but probably not in five years.

Speak Your Mind

*