The best fund manager of our time

Robert Rodriguez has accomplished the unheard-of-feat: driving staggering returns in both a stock and a bond fund for more than two decades.
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Fresh out of college in 1971, Rodriguez jumped into the hot growth stocks of the day. "I thought if you couldn't compound money at 20% to 25% a year, you were basically incompetent," he recalls.
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Then came the bear market of 1973-74. His favorite stock, a recreational-vehicle company called Executive Industries, started dropping from his initial purchase price of $22 a share. He bought more all the way down to $8, when he ran out of money. (His average cost per share was in the low teens.) The stock hit bottom at 88¢. The memory still haunts Rodriguez, who explains with a bitter laugh: "When somebody says to me today, 'This stock can't go any lower,' I say, 'Au contraire!' "
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The lesson didn't stop there. "I learned that if you make a mistake and you don't tear it apart to see what you did wrong, you're going to repeat it in the future. I learned that fear is a terrible thing to have." He adds, "The best way to minimize your fear is to have a solid understanding of the companies you invest in."
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Searching for answers in the library at the University of Southern California, where he was studying for his M.B.A., Rodriguez discovered Benjamin Graham and David Dodd's Security Analysis. Graham and Dodd helped him realize that chasing hot stocks was no way to pile up cold cash; instead, Rodriguez began to look past the fluctuating prices of stocks to determine the enduring value of the underlying businesses.

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He realized that Executive Industries, trading at less than $1 a share, had $2 a share in cash and $3.50 a share in real estate - plus an ongoing business that should bounce back once the recession ended. Instead of selling, he held on for dear life and eventually got out for around $22 a share, turning a nice profit on a stock that Wall Street had left for dead.
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"I realized then," he recalls, "that if I can survive the downturn I can live to participate in the upturn." According to Rodriguez, a true contrarian has to feel comfortable being lonely. And that, he says, means you can shrug off three unpleasant questions. The first is "Don't you know that...?" The next is "You're buying what?" And the third is "Are you nuts?"

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Crossing the Rubicon - Bob Rodriguez, FPA

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