“Even Monkeys Do Fall From Trees”

When I took up a Japanese language course during my younger days, our teacher taught us a proverb that goes like this:

猿も木から落ちる (saru mo kikara ochiru)

This roughly translates as:

“Even monkeys do fall from trees”

The proverb describes that monkeys, who are adept in climbing trees, do fall down sometimes. Applying in the real world, it means no matter how skilled an individual is, he/she would fail at some of the time.

Picture generated by Meta AI

I had brought this up after reading about Allan Lichtman, who together with a Russian geophysicist, developed a 13-point checklist in predicting the next United States (U.S.) president, known as “The Keys to the White House”. Applied throughout history from 1860 to 2020, out of 41 elections, the checklist predicted 38 correctly; that is an astounding 92.7% accuracy. Since the prediction tool was created in 1981, it came true nine out of ten times up till 2020.

Due to its high degree of accuracy, Lichtman was interviewed many times by the media on the 2024 election, and he stated constantly that the Democrats were going to win the presidency. Alas, this time marked the fourth failure of his prediction, which, however, made things worse with some brickbats being hurled at him. The effects of recency bias, prevalence of social media and the divisive U.S. political climate attributed to his criticism.

Bringing this to the investment front, there are many stories (known and minor) of famous investors and fund managers making the wrong calls. Warren Buffett admitted that he, too, made investment mistakes, such as buying ConocoPhillips when oil prices were at a high, and not buying Amazon and Google, to name a few¹. Long Term Capital Management, a hedge fund founded in 1994 with renowned traders and economists helming it, failed just four years later due to its use of leverage, the Asian Financial Crisis of 1997 and the Russian financial crisis of 1998². In a more recent case, Bill Ackman of hedge fund firm Pershing Square Capital Management sold Netflix at a loss in Apr 2022³, only to become a wonderful growth stock after recovering from 2023 onwards.

These instances can be considered as afterthoughts, or hindsight bias as some may put it, but this is not the important point.

The takeaway from this post is that, no matter how good a person is in his/her calls for a certain outcome, there is a high probability of things not panning out as it would. Whether the potential results were calculated based on hard facts and data, there will be a curveball being thrown in and mess up everything; in other words, the unknown-unknown factors come in and derail the whole works. While it is good to hear from these greats and geniuses, one has to know that they are still human after all (or monkeys concerning tree climbing).

Disclosure:

The Bedokian is invested in Google.

Related post:

Respect, Not Idolize

Disclaimer

1 – Woods, Laura. Warren Buffett’s failures: 15 investing mistakes he regrets. 15 Dec 2017. https://www.cnbc.com/2017/12/15/warren-buffetts-failures-15-investing-mistakes-he-regrets.html (accessed 20 Jan 2025)

2 – Hayes, Adam. What Was Long-Term Capital Management (LTCM) and What Happened? Investopedia. 19 Dec 2023. https://www.investopedia.com/terms/l/longtermcapital.asp (accessed 20 Jan 2025)

3 – Herbst-Bayliss, Svea. Ackman gives up on Netflix, taking $400 million loss as shares tumble. Reuters. 21 Apr 2022. https://www.reuters.com/technology/ackmans-pershing-square-sells-netflix-investments-2022-04-20/ (accessed 20 Jan 2025)