IS RIVERS CREAtING - The Rivers School

Alumni Profile
Jim Lowell ’79, P’15:
A Positive Take on America’s Future
By Christine Martin
Jim Lowell has been analyzing the
stock market for more than twenty
years as editor of Fidelity Investor,
ETF Trader, and The Rankings Service;
chief investment strategist for Adviser
Investments; and president of Fundworks,
Inc. He is the author of several books on
investing as well as a steady stream of poetry
and appears regularly on Marketwatch
and NECN. Jim will be the recipient of the
Alumni Excellence Award at the Reunion
Dinner at Rivers on May 16.
We caught up with him recently and
found a bit of optimism in his outlook for
America’s financial future.
When the Riparian interviewed you in
2002, the market was reeling in the
aftermath of 9/11. Where are we today
The current crisis is unprecedented in
scope and scale. It has shaken not simply
companies and even industries to their
core, but it has underscored a pervasive
sense of helplessness and hopelessness
which has shaken investors to their core
beliefs in investing. It is not the belief that
Capitalism has hit an iceberg, it is more a
sense that perhaps Capitalism was the iceberg
to begin with. Nothing feels safe. No
assumptions are secure. It is, as the German
Romantic philosopher G.W.F. Hegel
once quipped, “The night in which all cows
are black.” That being the case, I take solace
from history’s unyielding desire to repeat
itself; better days will turn up. Between
now and then, I’d recommend watching
the news with the sound off and taking any
sound bite about our current predicament
with more than a grain of salt. Put it another,
more hopeful way—Holderlin, in his
poem Patmos, proposes, “Wo aber Gerfahrist,
wachst/Das Rettende auch”—where danger
lies, there the saving ground presents itself.
Has your own “belief system” in investing
changed drastically
Since my awakening at Rivers in 1977, my
own belief system continues to evolve; the
market has a random chance of uplifting or
upbraiding my views, no matter how well
considered they are. I’m a staunch advocate
of diversification among types of investments
across different asset classes to better
account for the fact that today’s sage is
often tomorrow’s fool. I have also always
focused at least as much of my time and attention
on managing risk as I have on delivering
return. I enlist a unique tool and
perspective in my pursuits: one of my companies
holds the largest proprietary database
of individual manager track records.
This database allows me to answer a key
question: which managers have (or lack)
the skill sets to manage whatever environment
we’re in. Currently, I’m focused on
managers who weathered the 1989-1992
real-estate led banking crisis and resultant
market meltdown well. Cleverness and
luck are haphazard. Knowledge, intelligence,
and experience matter.
Overconsumption has received its share
of the blame, and yet we’re told to start
buying again to get the economy going
Where’s the healthy balance
We’re witnessing the convergence of several
types of overindulgence and the desire
to first control then better manage them.
Whether it’s our culture’s ironic obsession
with obesity and celebrity chefs, or Washington’s
command for obeisance to fiscal
conservatism and profligate stimulus, or
Wall Street’s projection of prudence and
pell-mell pursuit of profits, a healthy balance
is hard to find. In such moments of
imbalance, however, we all learn the necessity
of balancing acts as opposed to merely
acting balanced. That’s a healthy inclination.
At the end of the day, I believe that
we’ll be in better shape for having gone
through this current crucible. Meister Eckhardt’s
plaint that ‘pain is the quickest beast
to carry you to perfection’ rings true. So
does Chevy Chase’s Ty Webb quip in Caddyshack,
“A flute with no holes is not a
flute;” the sour, sub-prime note of products
that claimed to be one thing, turning out to
be nothing, are nothing new. Neither is the
fact that good and bad policies may get unjustly
punished or rewarded; that’s politics.
But the bottom line for investors will be
that good companies will survive based on
being able to balance, rather than cook,
their books. And, as my daughter knows
thanks to her 6th grade Latin teacher, Ms.
Favreau, caveat emptor.
10 • Riparian • Spring 2009