Our featured speaker for January’s Forum was world-renowned mountain climber Ed Viesturs, author of a number of popular books, including No Shortcuts to the Top.  In his talk of the same title, he spoke about what it took to climb the world’s 14 highest peaks, all over 20,000 feet (8,000 meters). His accomplishment—after an 18 year quest—was even more remarkable given that he did it without bottled oxygen. Throughout his presentation, Ed stressed the importance of preparation, planning and patience. Essentially, the most valuable lesson to draw from his achievement is the importance of risk management. For example, he felt that by not using bottled oxygen, he would be forced to do better planning and preparation, and thus be safer. An obvious analogy to the financial markets can be drawn to the use of clever “can’t miss” techniques and black-box strategies that inevitably break down (and usually at just the “wrong time”) and in the process seem to completely foil their creators; think LTCM in the 1990s and derivatives and CDOs just a few years ago.

Ed stressed that the ultimate measure of client/customer satisfaction is to “keep them alive”! In addition to doing his own climbing, Ed spent many years as a guide and he knew—as we do in our role as fiduciary and financial advisor—that it was his job to “keep them safe.” Ed’s unyielding motto is, “reaching the summit is optional, getting down is mandatory.” The key is making it safely and successfully through the whole endeavor. He acknowledged that along the way, ambition often plays tug-of-war with common sense —especially at high altitude—but the descent (or long-term sustainability) is the most important criteria. Too many climbers use up so much energy striving for the top that they simply cannot get back down; that is, they cannot complete the task. Ed is a preternaturally cautious climber who once turned back only 300 feet from the top of Mount Everest. From years of experience, and a few close calls, he emphasized the danger of complacency or over-confidence. Establish a set of safety rules and do not break them. Have the courage of your convictions, make plans, and have the discipline to stick with the program—regardless of the weather—similar to embracing, monitoring, and maintaining a balanced and diversified investment program.

Although it may be possible to “get away with things” a few times, eventually something will break;  and the longer we rely on luck, the greater likelihood of trouble when things go wrong—similar to market-timing, gambling,  and making heavily-leveraged bets. Nonetheless, too many climbers—and speculators—focus narrowly on the glory, often taking unnecessary or aggressive risks. Some succeed (at least for awhile),  gaining adulation and acclaim. But even then, Ed saw firsthand how this often played out. He has been involved in many rescues (or what could be called “bailouts”) over the years—helping climbers who were not part of his team at the expense of his own climb. Some were even “treated like heroes (for surviving their self-inflicted ordeals), rather than as victims of their own mistakes.” Of course, Ed understands that challenges make life interesting. They can be rewarding, fulfilling and worth pursuing…but still need proper and sensible preparation. He talked about “acceptable risk”… the same concept that applies to achieving many financial objectives and maintaining purchasing power over time. “If the weather clears, you want to be here”—that is, acclimated at the appropriate “base camp” (or investment program) and prepared, committed, disciplined and ready… and “not way down below” and unable or unwilling to take advantage of circumstances.

Ed Viesturs clearly understands that success requires passion; but he also acknowledges that survival requires humility. Both require patience. As he says, one must “learn the stoic, mind-numbing patience” to see things through. Each expedition required extraordinary patience—just getting acclimated typically took many weeks and his entire pursuit took over 18 years. He also reminded us to leave time for contingencies (or uncertainties), because there are inevitable surprises along the way. Finally, he recognized the importance of teamwork and working together one-step at a time to achieve results, and we at Sand Hill understand this too. In the end, Ed proved that one could climb the highest peaks of the world without taking reckless chances. In other words, there really are no shortcuts to the top… and beyond.