In his latest interview with RealVision’s Grant Williams, former Eclectica asset management co-founder Hugh Hendry delineates what he calls the “arrogance and conceit of a well-formed argument,” using examples from his own career, which has recently taken a difficult turn.

In September, Hendry shuttered Eclectica after 15 years, angrily declaring that “markets are wrong” after a badly timed long-vol bet resulting in some of the worst monthly P&Ls of his career back in July and August…

 

At the time, the 9.8% YTD loss triggered massive redemptions, which left the fund – which as recently as a few years ago managed billions – with just $30.6 million as of Aug. 31. At the time, an exasperated Hendry declared it wasn’t supposed to be like this…

Eclectica’s final P&L:

 

But a few months distance has clearly helped rejuvenate Hendry. In the interview, he shared some of the lessons he learned from one of the biggest defeats of his career:

He started by recounting a bet on Readers’ Digest magazine, an iconic American brand, Hendry said. He described his thought process at the time thusly: Because of its stature and its utility to working-class people, Hendry said he “bought in to the story” that the magazine would endure…but he was wrong…

“…So Reader’s Digest, you know here’s something where it’d been around forever. Dee Witt and Lionel Wallace had set this up were unbelievably rich, and you were just taking newspaper clippings, putting it together, and there are all these stories about after the Berlin wall came down. For so many people were trapped on the wrong side of the wall, except with communism, Reader’s Digest was like Coca-Cola; if only. I really bought into the story that Reader’s Digest was this iconic everything about America…”

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