Ivies in China Feature: James Melcher
Courtesy of Columbia College Today
Strategize. Defend. Adjust. Attack.
The tenets of Olympic fencing, or the guiding principles of a successful hedge fund?
The answer, according to James Melcher (Columbia ’61), is both.
“Fencing instills a certain high degree of self-discipline, much like the financial world,” says Melcher, founder of Balestra Capital and a member of the 1972 U.S. Olympic team in Munich. “Fencing is a very unnatural sport. In most sports, when you hit with a racket or fist, you hit hard; in fencing, in those crucial moments, you actually have to relax.
“It doesn’t take strength, it takes discipline,” he says. “And then, when the moment is right, you strike, and you strike quickly.”
As chairman of the Fencers Club, arguably the country’s most successful fencing club, and head of a highly regarded hedge fund, Melcher often will go straight from the boardroom to the fencing floor, carrying the lessons of one realm into the other. His strategy seems to be working: Balestra has had a compound annual growth rate of 28 percent since it was formed, almost nine years ago, as a global-macro hedge fund.
“In both fencing and investing, you get an instinct to go for something — and, if you do, you’re going to lose. You need to stay calculating, cool and in control of your mind,” Melcher says.
The parallels between fencing and investing were so obvious to Melcher that he named his firm after one of the sport’s shrewdest tactics — a “balestra” is a compound attack, usually comprising one quick, short move, followed by a longer, more severe thrust. And it sometimes dictates a strategic retreat, much like Balestra’s in the first quarter of 2000. The firm pulled its money out of the tech market then, even though the market was booming, only to bust a short time later.
“Sometimes a small defeat leads to a greater victory. It’s clear to those who really understand the nature of investing: Most people make investing decisions emotionally, and that’s what trips them up,” he says. “It is no surprise that the world’s greatest fencers have no emotions while they compete.”
Melcher’s journey to the top of both fields began on Morningside Heights — by necessity, he freely admits.
“It was the only school that accepted me,” he recalls with a chuckle. “It was just good luck, since it was also my first choice. I had lousy high school grades, but good college boards, so Columbia took a chance on me.”
To learn more about the founder of Balestra Capital, head here.
