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Monday
May212012

Michael Moritz

I've never met Michale Moritz and I don't know Michael Moritz - except through the reputation he has earned through years of exceptional returns at Sequoia.

Reading that he was stepping back due to an incurable disease reminds me not so much of Steve Jobs (I'm sure we will see quite a few comparisons there) but of Lou Gehrig stepping back from one of the great teams of all times.

And like Lou Gehrig, Moritz is already in the investing Hall of Fame.

While the absolute numbers at Sequoia have kept it at or near the top for long term returns, it is how they have generated these returns that is most impressive to me.

For years, Sequoia, under Moritz, has been a proponent of long ball investing - knowing that they would strike out a lot - but understanding that when they hit the ball out of the park, they would score a ton of runs (see the initial Google investment - or YouTube)

While many firms preach this sort of investing mantra - few have followed it with the discipline of Sequoia.

Moritz an his partners have  managed to extract the correct risk reward ratio across their portfolios - whereas others have not gotten nearly the reward on their winners (the risk is always the same in every case - a goose egg)

As an investor you simply have to understand the relationship between risk and reward and size your investments accordingly. Moritz and his partners have.

And that's the difference between the hall of fame and an under performing asset class over a career.

 

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