The weather promised to be unpleasant: cold winds with occasional rain. Such conditions are bad news for just about every activity you might want to do during a Yellowstone Park adventure … with the exception of fly fishing.
When we arrived at Yellowstone’s Soda Butte Creek parking area, we were the only fishermen there. This did not deter us; in fact, we were pleased by it. Experienced fishermen know that clouds and rain bring newly hatching insects, and that opportunistic trout gorge on them.
So, thanks to the bad weather and thin crowds, we anticipated a great day of fishing.
We began the ritual of putting on waders and stringing rods, all the time engaged in the typical pre-game banter. We swapped stories from previous experiences under similar conditions, and asked one another questions like, “What fly are you going to start with?”
In the meantime, two more cars arrived. Oh well. Several people got out, engaged in a friendly conversation and exchanged cash. Then one of the vehicles departed, leaving only one fellow and his car. He got his fishing gear together and headed to the stream.
We learned later that the person who stayed was a professional fishing guide who had met his clients at the parking lot. Upon seeing the weather conditions, the clients paid the guide $450 for his time and left. “It was too cold and rainy,” they complained, “and the weather forecast was bleak.”
The guide seemed pleased. He had been paid, and was now free to fish on his own in what he was confident would be great conditions.
What a shame that his clients didn’t tough it out – for them, anyway. It didn’t end up raining as much as had been forecast, but it rained enough. As anticipated, the combination of few people and a bounteous insect hatch made the day one of our best fishing experiences ever. The small stream yielded cutthroat trout by the dozens, with none smaller than a foot long. One trophy, caught by my friend Scott, was an impressive 20″ long. Not to worry — all were returned to the stream.
As I reflected on the day during the drive home, I was struck by how similar it was to our investment experiences over the last several years. “Weather” forecasts predicting poor economic outlooks have kept many people out of the market. As a result, they have missed out on many fine experiences between the scattered downturns.
In contrast, those of us who have kept our hooks in the water have caught some fine returns. And, unlike our catch & release fishing experience, disciplined rebalancing has enabled us to keep and enjoy some of those returns, while allowing others to continue to grow. For the disciplined investor, equipped with protective diversification, it’s been a fine run.
The central message is that being a fair-weather fisherman or investor is expected to lead to similarly poor results. By heeding the evidence on what leads to desired returns, we learn that: (1) inclement conditions can contribute to fair returns, and (2) one cannot catch a fish without wading into the stream … and staying there.
Please feel free to email me if you have questions about investing or fly fishing.