13 March 2014

GM Capital's Patrick Wolff

This week's Barron's has a familiar face in its 'Interview' section: A Chess Master Scans the Market for a Checkmate by Lawrence C. Strauss; 'Grandmaster Capital's Patrick Wolff discusses strategy, stocks he likes and dislikes, and his global outlook.' It starts,

Patrick Wolff's résumé includes two U.S. chess championships, first in 1992 and again in 1995, when playing professionally during his time off from college. The Harvard-educated philosophy major earned the distinction of grandmaster, an elite level. Nowadays, Wolff, 46 years old, is running Grandmaster Capital Management, a hedge-fund firm in San Francisco overseeing about $230 million. And though he doesn't play professionally any longer, he hasn't stored his chessboard in the attic just yet.

In recent years at Berkshire Hathaway's annual meeting, Wolff, wearing a blindfold, has played multiple chess games simultaneously. "I win more than I lose," he says, noting that he has to keep track of half a dozen games in his head. "But it is a good show." Chess, with all of its complexity, served as good training for Wolff the portfolio manager. [...]

'Barron's: Could you talk about how longevity treats elite chess players versus money managers?'

Your peak years in chess are generally in your 30s. And once you hit somewhere in your late 30s to early 40s—it is different for different people—but around that age you start to decline. The person who lost the world chess championship last year, Viswanathan Anand, is a friend of mine. He is 44, and there is no question he peaked about five, six years ago. You could see it in the quality of his play and the result he got; that's normal.

The wonderful thing about investing is that Warren Buffett is going strong in his 80s. Investing is much more cumulative. So long as you're sharp, you can do this for as long as you want to. In chess, you have both an analytic faculty and a judgment faculty, and the judgment gets better as you get older. But the analytic faculty begins to decay as you get beyond a certain age—just the ability to hold the board in your head and manipulate it. Well, I'm sure that Warren Buffett can't do mental math at 83 the way he could when he was 33. But it doesn't matter because he has a calculator. It's the judgment faculty in investing that really matters, and that is what drives it as you accumulate more and more experience.

I doubt that Barron's would appreciate me giving away GM Wolff's investing recommendations, so you'll have to locate a copy of the entire interview. One of the comments said,

How did Wolff get such a primo job after spending his youth as a chess player? I mean, chess is not the sort of pursuit that first comes to mind as a wealth-building profession. I guess he had some connections...

Does the name Peter Thiel ring a bell?

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