(Editor’s Note: Today we’re sharing a classic Jared Dillian essay on the nature of art, fame, and the one person in the world he’d trust to manage all of his money. Those of you who read The Daily Dirtnap already know Jared is under the weather and taking a few days off to recuperate.)
My favorite writer in the world is Barry Hannah.
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I was first introduced to Barry Hannah in college, in an anthology of Vietnam War stories. His story “Testimony of Pilot” remains to this day the most incredible thing I have ever read.
When you read Barry Hannah, you get the sense that he was operating on a different plane. Everyone else is playing checkers, and he was playing Axis and Allies. It’s mad genius. It’s impossibly mad genius. I still haven’t seen another writer like him to this day, and I have spent my entire life looking.
Fast fact about Barry Hannah: No book of his ever sold more than 7,000 copies. So was he a success or a failure?
Commercially, he was a miserable failure. If you sell 7,000 copies of a hardcover, you are getting three to four dollars in royalties per book. I’d bet Barry Hannah made less than $50,000 cumulatively selling his writing throughout his career. You can’t make a living on that, for sure. For his day job, he was director of the MFA program at the University of Mississippi for many years (Oxford actually has a thriving writing community).
But he won awards up the wazoo. Too many to mention. All the big ones. And even more importantly, if you take an informal poll among the best writers in the world, many of them will name Barry Hannah as one of their favorite writers.
To be the best writers’ favorite writer—to me, that would be the greatest thing in the world.
Let’s leave out the Tucker Maxes of the world for a second. Not to pick on Michael Lewis, but let’s pick on Michael Lewis. Hard to think of a nonfiction writer who has enjoyed (and continues to enjoy) more commercial success. They keep making movies of his books with Brad Pitt in them.
Is he the best writers’ favorite writer? No. But he has made enough money to write books poolside at the Claremont.
And there is a reason for that. He has a gift for being in the right place at the right time, for making complicated, important subject matter easy to understand, and for being an authority on many different things (whether he is or not). And yes, he is also a very good writer. He does what he does artfully, but is it art?
It is not.
So what kind of career would you rather have? Rich and famous, or poor and respected?
The Nature of Fame
I think most kids growing up have some desire to be rich and famous, but most people outgrow the famous part over time, preferring instead to be rich. Me too. Rich and anonymous is the best thing in the world.
But still, some people like to be famous. The Kardashian thing. I don’t get it. Well, that is what Instagram is for.
But there are different kinds of famous. Michael Lewis is super famous. Barry Hannah is also super famous, but in a distinctly different way. Barry Hannah is famous among people who really matter (in his field, people who write literary fiction).
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Let me ask you another, more important question: Who is the best money manager in the world?
If you don’t count 2015, you would probably say Ray Dalio, founder of Bridgewater Associates. 30+% returns for years and years.
Or maybe Stan Druckenmiller. These are household names.
But I would bet you anything that these men are not the best money managers in the world… just the best known (though they are great).
Somewhere out there is a guy sitting at home in his underwear compounding at 100% a year. Maybe he is even reading this newsletter.
Why doesn’t that guy take outside money? Maybe because of the regulations, maybe because of the hassle, maybe because his strategy isn’t scalable. But the question wasn’t which investor makes more money than everyone else. The question was which investor is better than everyone else.
Do you think Barry Hannah (who died in 2010, well before his time) would have traded it all for books like Liar’s Poker, The Big Short, Moneyball? No way.
Nothing is more valuable than reputation. No amount of money can buy it. It literally is priceless.
The Implications for Investing
Figuring out who is the best money manager is an impossible task. You can look at track records, but supposedly the past is no predictor of the future (I disagree slightly). So if you are picking a mutual fund, how do you decide?
I always tell people that it’s like betting on a horse. You’re picking an athlete. You’re picking a guy or a gal, not a strategy.
You certainly don’t look at assets under management. Gathering assets and investment performance are two completely different skills.
Do you pick the guy who sounds smart on television? No, for reasons described above. Also, looking smart on TV is a different skill than investing.
Do you go by brand name? Can’t go wrong with Vanguard or Fidelity, right?
How do you know in your heart of hearts that this man or woman is a better investor than anyone else? Answer: you don’t, unless you know them personally.
I know lots of money managers personally. There is only one that I would give every last dollar to (I haven’t yet, but I might someday). But if I were looking at a picture of him in Money Magazine, or his 1/3/5/10-year performance, I wouldn’t know how good he was. I only know because we are friends, because I know his character.
He’s the investor that smart investors like me give their money to. Like the best writers’ favorite writer. That is how you find out who’s the best. It is the person all the best people respect.
Before I go, I want to talk about bonds for a moment. A staggering number of investors avoid bonds at all costs because they don’t understand them. That means they are hopelessly gorked up on stocks and woefully underinvested in bonds. The thing is, everyone needs a healthy allocation to bonds, especially during these volatile times.
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