Van Halen, Tattoos and Brown M&M’s Can Teach Us About Making Money in the Stock Market

I don’t usually hang out with rock stars or in tattoo parlors.

But Labor Day Weekend in 2013 had me chillin’ with David Lee Roth of Van Halen at Kings Avenue Tattoo on the Bowery.

Well, sort of.

I was on one side of the studio hanging out with artists Kip Fulbeck (dear friend) and Taki Kitamura (new friend) while they were photographing people (men, mostly) with large tattoos (some with full-body suits) in the Japanese tradition.

These large-area tattoos are a true commitment, nothing less than masterpieces in the Ukiyo-e tradition, and the result of a lifetime collaboration between tattoo artist and human canvas.

The tattoos can take up to a year and a half to create, not to mention the pain involved.

At the end of the shoot, a portrait of the Kings Avenue Tattoo artists was taken, and a guy, who owner Mike Rubendall had been working on all afternoon, was invited to join in.

And did he ever.

He leapt into the fray (literally) and immediately began clowning around, resulting in this great picture.

I asked who the life of the party was:

“David Lee Roth.”

“Sounds familiar. Who’s he?”

“He’s in a band called Van Halen.”

“OMG! That’s the brown M&M guy?”

Yes, it’s true; I am indeed a world-class nerd.

Someone mentions a Rock and Roll Hall of Fame musician (as I later learned), and the only reason I’ve even heard of him is that I’m a total business groupie.

Let me explain …

Earlier in the year, for weeks on end, it seemed that I couldn’t pick up a book or read an article without finding a reference to David Lee Roth and his infamous “M&M’s clause.”

It seems that Diamond Dave, while better known for his acrobatics and music-related talents, is also a shrewd businessman.

Van Halen was one of the first bands to have world-class pyrotechnics during its shows, and safety was critical. So Roth snuck a clause into the middle of his lengthy contracts, requiring that the green room be stocked with M&M’s and that all the brown ones be removed.

The first thing the band did upon arrival at a gig was to see if there were any brown M&M’s in the bowl.

If there were, they knew that the venue did not pay attention to detail and that they’d have to triple-check the setup. If there weren’t any brown M&M’s, they could relax, knowing that the venue would carry out the band’s instructions to the letter.

Observing the rock (and business!) legend in the flesh made me ponder what we money geeks could learn from him.

Three things came to mind.

Stay fit. As a musician, Roth is known for his acrobatics. He was still ripped and looked a good fifteen years younger than his biological age (fifty-seven).

He came without an entourage and asked for no special treatment, getting tattooed in public like everyone else. High energy, full of life, and incredibly gracious to the fans who came up to chat (while he was getting worked on!), he was clearly a man who delights in being alive (way more Tigger than Eeyore).

While stock pickers don’t have the stress of entertaining millions, they do marinate in a stew of stress hormones daily, a biological concoction that may explain why they tend to be fat and grouchy (or perhaps I should speak for myself).

I’m told that thirty minutes a day of movement flushes out the fight or flight hormones and that daily meditation eases the soul.

That means we will live longer and think clearer.

Embrace discomfort. As far as I could tell, DLR doesn’t have other tattoos — he’d signed up for one of those large, wearable art commitments years ago and was in getting it recolored to keep it fresh. He was going beyond his physical comfort zone and embracing it wholeheartedly.

On the flip side, I’m amazed at how resistant to change so many of my former investing brethren are.

But the world is constantly changing: new research, new tools, new facts, new technology, new business models, new financial instruments, and more. Clearly, being good at this job means being comfortable with ambiguity and uncertainty.

So why not embrace the new and refresh the old?

I may love novelty to a fault and have chased after any shiny new object that could have helped our research process, but better that than be closed-minded, fossilized, and afraid of change.

If you’re not constantly looking to improve your investment process — and by this, I don’t mean changing your values or discipline, I am talking tactics — then you may as well hang up your guitar.

DLR wasn’t changing the tattoo on his back, but he was keeping it fresh.

Find some brown M&M’s. It’s extremely difficult to separate process from outcome in our business. Even so, we can build within our process the equivalent of the brown M&M’s test.

In other words, what can we do to make sure that we are paying attention to detail so that, whatever investment pyrotechnics occur, there’s no resulting mayhem and havoc?

For us at Daruma, this meant three things:

1. Consistent documentation of our investment case

2. Updating our research relative to critical milestones

3. Laying out our rationale about our valuation targets

Keeping track of what was stale and what was missing in our research workflow was how we picked out the M&Ms from our investment process bowl.

Lousy outcomes were easier to bear psychologically, knowing that we did all that we could and as we promised.

It allowed us to develop resilience and an open mind for the next opportunity.

And speaking of embracing discomfort, I did listen to some Van Halen, bought some brown M&M’s, and got with the fitness and meditation program.

I’m still debating the tattoo…

Photo credit: Kip Fulbeck