Do you watch Air Crash Investigation, on the Discovery Channel? As a nervous flyer, I love it. I’ve seen them all, some several times.
Occasionally, they tell a story of a single catastrophic failure that was unavoidable and unrecoverable: out of nowhere, without any warning, the wings fallÂ off.
But much more often, it’s the story that we first saw in the film The China Syndrome: it’s only when a dozen different things go wrong, one after another, and then the thirteenth thing goes wrong too, that the plane actually crashes.
The weather over New York is bad. A short closure of the runways means that many planes are circling. A plane from Colombia is towards the back of the queue, held in the stack for over 80 minutes. It has had to divert to Miami en route, to drop off an unwell passenger. The tanker operator at Bogota had a scam going, and put in 500 gallons less than he should have done. The plane’s fuel gauges have been badly serviced. The pilot and the co-pilot don’t speak very good English. They notice the fuel is low, but they fail to explain just how low to Kennedy ATC. Eventually they get to attempt a landing, but there is windshear and they have to go around again. There’s not enough fuel left for this. Five miles out, on their second final approach, the plane runs out of fuel and falls onto a village in Long Island. Game over.
Sounded quite realistic, that, didn’t it? Actually, it is quite realistic – a somewhat souped-up version of the story of Avianca Flight 52, which crashed on final approach into JFK in January 1990. But what’s it got to do with Fidelity?
Simply this: that more often than not, the single most important effect upon an outcome is the way people react when a problem arises. Lots of bad things happened to Avianca 52, some of them avoidable and some of them not. But if only the crew, instead of faffing about, had declared a fuel emergency 40 minutes into that 80 minute hold, they could either have jumped the queue and landed at JFK without difficulty, or flown on to Boston, their alternate airport.
I suppose that as many bad things can happen in fund management as in aviation, although it’s only money that gets injured and dies. But the question is, when they do, who has the combination of resources, depth of pockets, experience, commitment and strength of management to pull the fund out of its nosedive?
I don’t know the answer to this question, but if I found that the world’s biggest investment management business is also a specialist operating exclusively in the investment market with no other operations to divert or distract, and is also a private company with no need to justify its actions (or the cost of those actions) to its shareholders, then they’d come towards the top of my list.
And that’s why, if I had any money to invest (not just a large bunch of shares in my parent company Cello that are worth about a quarter of what they were when I received them), I’d invest it with Fidelity.