Men are from Mars because they missed the flight to Venus. When to leave for the airport has always been a subject that my wife and I have viewed from different perspectives—my view: late enough to make it exciting; my wife's view: early enough to allow for a traffic jam, a flat tire, airport shopping, and a full course meal before the flight.

For years I left for airports without allowing for any spare time and never missed a flight. About eighteen months ago, I moved to Martha's Vineyard, where the travel time to the airport can be accurately estimated because of the limited traffic off-season and because the airport is so small—sort of like the one in the one in the old TV series Wings, only smaller. (At least it was when I began this book; a new airport has since opened.)

One morning, only a few months after we had moved to Martha's Vineyard, my wife, Jo Ann, and I were scheduled to fly to Boston. I was so cocky about the predictability of getting to the airport on time that I left our house—approximately a twenty-minute drive away—only thirty-five minutes before the scheduled departure time. The drive took a few minutes longer than expected, due to being stuck behind a slow driver on the no-passing, single-lane road; I realized I had cut it just a little bit too

tight.

"We'll still make it," I assured my wife, "but we won't have much extra time." She seemed skeptical—irrationally so, I thought. We pulled into the airport entrance only ten minutes before flight time. Even though the parking lot was only a stone's throw from the terminal, I dropped Jo Ann at the entrance, saying, "Let them know we're here."

When I returned about one minute later, I found Jo Ann standing outside waiting for me with a troubled expression. Confused to see her there, I asked, "What's wrong?"

"The plane left," she said in a voice that was a cross between disappointment

and "I told you so." "What do you mean, the plane left?" I asked, glancing at my watch, even though I knew the exact time. "It's only eight minutes to ten."

I went into the terminal, angry that the small prop plane had left without us before the scheduled time. "I don't get it," I said to the woman at the airline counter, all prepared to be the aggrieved customer.

She couldn't have been nicer. "Our planes leave as soon as everyone is here. Since we hadn't heard from you to tell us you were running late, we assumed you weren't coming. If you had called, we would have held the plane." And, you know, they would have, too; that's how Martha's Vineyard works. How could I be angry at anyone other than myself after that explanation?

Fast-forward about six months—the beginning of the interview process for this book. I am scheduled to catch the first flight on an intricate itinerary that will take me to four states in four days for six interviews. This schedule has no leeway for missed flights. Wiser from experience, I make sure to leave early for the airport, allowing for plenty of extra time. On the drive there, Jo Ann, who is dropping me off, notices that I have lint on my blue blazer. She offers the helpful hint that I should ask the people at the airport counter for tape to brush it off. We arrive about thirty minutes early. I pull up to the curb and say good-bye to Jo Ann. After checking in and sitting for a while, I realize 1 have enough time to take care of my lint-laden jacket. I walk up to the counter and obtain the necessary tape.

There are about a dozen people in the small waiting room. A few moments later there is an announcement for my flight: "Now boarding section one, seats one to eight." I pull out the red, plastic, envelope-size boarding pass and notice that it is emblazoned with the number 11.

"How quaint," I muse, "that they would board such a small flight in two sections." I sit down and return to my lint-removal project. I'm sitting there absentmindedly, picking lint off my jacket. Suddenly I snap back into reality. I realize that it must be at least five or ten minutes since they called for the boarding of the first group of passengers. I look around the waiting area and, to my horror, I discover that it is virtually deserted. I jump up, run through the doors to the airstrip, and see a small plane with propellers whirring. "Wait!" I yell, waving my arms frantically as I rush toward the plane. I see my whole precisely orchestrated  trip—all four days, four states, and six interviews of it—unraveling on the spot.

The airline attendant intercepts me. I flash my large red boarding pass. "You're not going anywhere," he says firmly. At first I think he means that it's too late and I missed the plane. But then he adds, "Your section will be leaving in five minutes." That's when I learned that at the Martha's Vineyard airport "sections" refer to different planes!

I slink back to my seat. The moment of panic having passed, my sense of awareness returns, and I am able to appreciate completely the full scope of my stupidity. The last time I felt that embarrassed I had just asked an infrequently seen relative when she was "expecting," only to learn subsequently that she had given birth two months earlier but had obviously retained a good portion of the gained weight. Oops.

"Okay, okay," you're saying, "a slightly amusing anecdote—maybe— but what does this have to do with trading or investing?" Simply this: If you're too busy picking the lint off your jacket, you're liable to miss the plane. In other words, don't get so caught up in the details that you miss the big picture. Here are some examples of market myopia:

> a trader who does exhaustive research trying to identify the most promising new technology companies but overlooks the fact that a 70 percent price rise in the sector during the past six months implies an unusually high-risk investment environment

> a trader who scrutinizes a company's financial statements and reports but fails to realize that the company's soaring profits have been due to a single product whose future sales are threatened by the imminent entry of new competitors

> a trader who is engrossed with finding better timing-entry methods but virtually ignores such critical questions as: When and how will positions be exited? How will risk be controlled?

All of these examples contain the same basic message: Maintain a whole-picture perspective. Focus on the entire market and the sector, not just the individual stock. Be attentive to qualitative factors, not just the available quantitative information. Develop a trading plan that encompasses all the aspects of trading, not just the entry strategy.

What did the customer want?

Instant gratification, excitement, sizzle, the comfort of knowing that lots of other people were buying the same stock, and a million reasons why the stock would go up.

So you tried to make the stock sound as good as possible without any qualifications?

Absolutely. That's what all stockbrokers do.

I take it then that you disagree with the premise that more diversification is better.

For a number of reasons. Concentration is critical to superior performance. The greater the number of stocks you hold, the more market like your performance becomes, and the less value you add as a money manager. Those who preach diversification as a risk control measure are essentially hedging their fundamental ignorance of their own holdings. Also, one of my objectives is to be able to make money in any market climate, which means that I have to decouple my performance from the market indexes. Limiting myself to a relatively small number of positions is essential to achieving this goal.

Finally, from a purely practical perspective, it is much easier to find and stay on top of fifteen positions. I believe that few, if any, fund managers are as well informed about our fifteen stocks as we are.

Why fifteen as opposed to five or fifty?

There has been some convincing academic research showing that with fifteen different stocks one can achieve approximately 80 percent  of the benefits of much broader diversification. Keep in mind, though, that to achieve our twin goals of exceptional performance and low correlation with the broader market, we don't want to diversify too much.