When I sat down to write my book about why smart investors usually fail if left to their own devices, I thought back to a phone call I received more than a decade ago. You attract some crackpots when you’re a journalist, so I’m always a bit wary of an unknown number. Every once in a while, though, if you’re lucky, the person on the other end of the line is really special.
That was the case on the Monday morning after a column I had written appeared in Barron’s Magazine. The faint, raspy voice of the man who wanted some more details sounded like Methuselah and I wasn’t that far off. When we finished chatting he asked if I could send him some of my source material.
“Sure—what’s your email?”
There was a long pause. He asked if I could fax it instead. Even in 2005, though, I had no idea where to find the machine tucked away in our newsroom. I insisted on using email and he slowly—very slowly—recited his address to me.
“I-R-V-I-N-G … then there’s a period … K-A-H-N … then there’s a thing that looks like an “a” with a circle around it …”
I finally got the whole thing but wondered who this guy was. Googling his name, I found out that I had been speaking to a living Wall Street legend. Then aged 98, he not only was the oldest money manager still in business but had gotten his start working for Benjamin Graham, the father of value investing and a second father to Warren Buffett. He was Graham’s research assistant when he wrote the 1934 classic Security Analysis.
Before that, back in the summer of 1929, he made his first big stock trade while still a clerk, selling short Magma Copper, the Google of its era. The market peaked just weeks later and crashed that October, doubling his money.
I recounted this tale to a colleague a couple of years later in the thick of the global financial crisis and she asked why I didn’t give him a call and ask him what he thought about the world. It turned out he was still at it and pleased to share his wisdom. He was telling his clients at the time to ignore the headlines and buy beaten-down, high-quality stocks. As we know, that turned out to be great advice.
What I also found interesting was his take on his masterful 1929 trade. Kahn relied on his perceptions rather than hard analysis as he didn’t know yet how to value a stock. Young traders were zipping in and out of the market.
“They were all borrowing money and having a good time and being right for a few months and, after that, you know what happened,” he said in an NPR Interview.