The Great Atlantic Air Derby

Raymond Orteig, a successful hotelier in New York offered a prize of USD 25,000 in 1919 to anyone who could fly non-stop to cross the Atlantic.

No one took up the offer that was renewed in 1924.

The 1st team that took it up was set up by French war hero Rene Fonck and Russian Igor Sikorsky.

Sikorsky built the plane having at a cost of USD 100,000 with backing from a clutch of investors.

It was a plush plane with leather fittings and cooking facilities.

Unfortunately, as they took off on their voyage, the plane crashed before the take-off.

  • Here is what happened:
    Fonck insisted on flying even before everything was ready
  • He overloaded the plane with excess fuel, food, radio, clothes, presents etc., etc.,
  • The load amounted to 28000 Pounds that the plane was in no condition to carry
  • As the plane started taxi on an ill-prepared airstrip and gained speed, it took inordinate time to take off and eventually when it seemed it had gained enough speed, it still couldn’t take off and just tumbled off the runway
  • While Fonck jumped off, 2 of his fellow crew got burnt inside

100,000 USD and 2 lives wasted for nothing

The 2nd team led by Richard Byrd supported by Rodman Wanamaker with plane designed by the legendary Anthony Fokker made a plane that seemed air worthy.

Here is what happened:

  • The plane was designed with fuel tank occupying the middle part thereby effectively cutting off passage between the front and the back
  • As the plane took off handsomely, Fokker who was at helm realized that the only way to land was to come down nose first
  •  As Fokker attempted to land as gently as possible, the plane went down nose first and toppled over
  • Part of the propeller pierced through the chest of one of the members while Byrd had his left arm snapped off

Simple but deeper

The lessons seem simple, but deeper.

Throughout history humans have grown by taking on challenges that move them beyond the comfort zone to make progress.

The 2 teams took on the challenge not merely for the prize but to make it possible to fly long haul.

What really happened?

  • The enthusiasm was there
  • The attempt and bravery were intact
  • The competence was missing

Each of the teams above has members with background in aviation.

While Fonck had destroyed over 75 enemy planes in World War 1, Fokker was responsible for making the 1st machine gun to be used by attaching it to the propellor of the plane and later build planes professionally.

However, in attempting this flight they needed more that the machismo and needed to be practical about completing such a long-haul journey.

Everything is Simple, till it’s not

I keep reflecting on equity market investors.

Especially the ones that came in post pandemic in 2020.

The novice inexperienced player who doesn’t understand risk gets blessed with beginner’s luck.

So far so good, however if think of beginner’s luck as expertise, you have had it.

Just like Fonck or Fokker, you would be probably ill-prepared about your own inadequacies even though they at-least had a background in aviation.

Enjoy the luck, then step back

Now that you have experienced the beginner’s luck, you might want to step back and evaluate how prepared are you.

The following is bound to happen:

  • Market mean revert
  • Unintended consequences of what took the markets higher
  • Something completely unexpected

Think about what happened with Fonck, overloading the plane, it didn’t even take off

Think about what happened with Byrd and Fokker, no way to balance the load.

  • Over concentration
  • Lack of balance
  • Not reading the tea leaves

The reason these challenges happen is because they are beyond the core competence of an average investor.

Learn or Hire

If you want to do something full-time, either learn or just hire an expert who will help you navigate.

It’s a long-haul flight, don’t just take off without adequate preparation.

Remember things might still go wrong, however you will at-least be better prepared.

Stay the Course

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