Coffee, cake and strategies

ANNA LEVINE

What do a retired Shakespeare professor, a jazz pianist/ management consultant and a tour guide/archeology buff all living in a small suburb outside of Jerusalem have in common? Twice a month, they meet for coffee and cake to discuss investment opportunities and debate the value of macroeconomics as they review global economic developments.

Ephraim G. is a former English professor at the Hebrew University of Jerusalem. Today, though he has retired from the university, he is still involved in education, helping to fund and run a teacher’s education program. If you ask him about his investment strategy, he’ll say he’s strong on stock options and event-driven situations like new product developments and mergers.

Getting together to discuss investing with his two friends is a world apart from his previous life in academia. “Stocks and business in general have always been a wonderful balance to the often non-reality-based conceptions of a university English literature department,” he explained. Professors “can teach Little Dorrit one day and fail to understand basic economic realities the next.”

Keith A.’s background is in economics and engineering. He is a former management consultant in South Africa and North America and, more recently, a member of the research team for a global hedge-fund company. He said he thinks of Warren Buffett as his guru, follows a value-driven approach and attempts to ignore expert predictions, pointing to research that has illustrated how humans tend to be over confident in their predictive abilities. When asked about investing in Israel,

Keith said that he has been keeping an eye on “Teva, following the decline in its share price, the subsequent revamping of its senior management team and its now less aggressive growth strategy.”

Michael L., a tour guide/archeologist and Gypsy-jazz player, is considered the conservative in the group, preferring well-managed and high dividend-paying companies. He is also less likely to give straightforward information about his strategies.

When asked what he gets out of sharing ideas with the group, he joked, “Money. Money is not made by individuals, unless they are stealing someone else’s ideas. Just look at Samsung recently – successfully sued by Apple for stealing ideas. In [the group’s] case, we just haven’t the strength to go out and steal, so we share!”

Being a savvy investor, it seems, has a lot to do with understanding the psychology of human behavior. One of the advantages of meeting and discussing issues with the group is to make each investor aware of their predispositions. Behavioral psychology has shown that people have their own innate biases, so it’s good to hear other opinions, said Michael.

“Roughly, we are all middle- to long-term investors,” he explained of the group’s overall strategy. “The basic idea was that each person is supposed to bring to the meeting one idea, stock or strategy. Though, sometimes, when we don’t feel that it is a good time to invest, we just shmooze.”

“The Israeli stock market is small, and there are not the same safeguards you find in the North American markets,” he later noted. “But there are lots of Israeli stocks, Teva, Magic Software, etc., that are listed in the U.S., and that’s the great advantage of the Internet: you can get all the info you want about any stock, from anywhere!”

Investing is all about limiting big mistakes, said Keith, quoting South African financial consultant Charles Ellis, who said that investing is a “loser’s game.” Keith suggested that, instead of thinking like an investor, people should consider the game of tennis. Champions, like Serena Williams or Andy Murray, win by making relatively few errors; pro-tennis is a winner’s game.

With investing, however, “[h]umans are primarily irrational, subject to positive or negative stress, and so continually make big mistakes, buying when optimism is high, selling when pessimism is rampant,” he said. Instead, Keith said he thinks about the long game, and subscribes to Buffet’s adage for the win: “Buy when others are fearful and sell when they are greedy.”

Having known each other for close to 20 years, Ephraim, Keith and Michael have shared meals, holidays, milestones and, more recently, their intellectual and financial interests. They may not agree on everything, but they enjoy trying to convince each other of how best to see the financial markets. When asked if having particular strengths helps clarify issues for one another, Michael said, “It’s not so much a question of our strengths but rather our different points of view that helps us see things clearer.”

Following the market from an office at home is solitary work. All three agree that they “would never give an investment idea to someone they don’t know.”

And, in an unguarded moment, Ephraim added, “sharing information may not make me less confused, but it sure is nice to have the company.”

Anna Levine was born and raised in Canada and has lived in Israel for more than 20 years. She writes young adult novels, children’s books, short stories, poetry and, most recently, plays. Her published work is available in Canada through Chapters/Indigo or at annalevine.org. Potential investors should consult with a professional advisor before taking any action based on the information above.

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