Ability to survive a calamity is the key to staying wealthy

I HAVE a collection of letters sent by fund managers to their investors when closing their fund. They are published in the throes of large bear markets, and invariably the letter starts with a version of “I could not have imagined that markets could have fallen so far so fast…”.

Often, the fund’s losses and closure are blamed on the market going through a “once in a 1,000-year storm” that no one could have foreseen. Instead of looking inwardly at their own shortcomings in terms of investment skill, blame is placed on the market for doing something “unexpected”.

This is why you rarely see very long investment track records through multiple crisis periods. Last week, I wrote about one of two lessons I learnt after three decades of managing money – that mindless pursuit of more wealth does not lead to happiness.