Nobody knows anything

Why the City is like Hollywood

https://www.pricevaluepartners.com/nobody-knows-anything/

“The single most important fact, perhaps, of the entire movie industry: NOBODY KNOWS ANYTHING.”

• William Goldman, ‘Adventures in the Screen Trade’.

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And not just the movie industry, either. The world of politics (for example) merges with Hollywood in the form of Alan J. Pakula’s 1976 film ‘All the President’s Men’ (screenplay by one W. Goldman), which takes on the now infamous Watergate break-in of 1972 which ultimately brought down the Nixon administration. Goldman was keen to avoid “Hollywooding up” the raw material; as he makes clear in ‘Adventures..’ what’s truly extraordinary about the fiasco is not what happened in real life, but what happened in real life that never even made it into the film.

By way of examples.. The Watergate burglars (the “Plumbers” team working for Nixon’s re-election campaign) made, not one, but several bungled attempts to break into the Democratic National Committee (DNC) offices in the Watergate complex in Washington, D.C., in 1972. Their goal was to plant listening devices on phones and photograph documents, primarily targeting DNC chairman Larry O’Brien.

They made multiple failed or botched entries into the building, with the final one on June 17 leading to the arrests that triggered the scandal. The operation was plagued by poor planning, amateurish tradecraft, and repeated errors by a “ragtag” group that included former CIA/FBI operatives like James McCord, G. Gordon Liddy, E. Howard Hunt, and Cuban exiles (Bernard Barker, Virgilio Gonzalez, Frank Sturgis, and Eugenio Martinez).

On May 26, Hunt, Martinez, and others posed as executives to access a banquet room connected to the office stairwell. They hid in a closet to avoid a night guard but couldn’t pick the lock to proceed further and ended up stuck overnight in the banquet room. A parallel effort to bug George McGovern’s campaign headquarters also failed twice when a lone volunteer was seen working late.

On May 27, the team tried the DNC offices directly, but locksmith Virgilio Gonzalez’s keys didn’t fit the locks. He had to fly back to Miami to replace them, thus aborting the operation.

On May 28, the team finally got in via the garage. They taped open door latches (by Sturgis and Gonzalez) to prevent being locked in, planted bugs on phones (including those of staffer R. Spencer Oliver and O’Brien’s secretary), and photographed documents. But they didn’t know the layout and bugged the wrong locations (an empty conference room instead of O’Brien’s actual office).

One bug (on O’Brien’s secretary’s phone) failed to transmit properly; McCord couldn’t pick up the signal with his receiver afterward.

By leaving tape on the latches, they created a detectable pattern for later attempts (though it wasn’t noticed immediately).

The team then went back to fix the malfunctioning bugs, plant additional ones (including one disguised in a smoke detector), and gather more photos. This was their third (or fourth, counting preliminary efforts) attempt at the site.

James McCord elected to tape multiple latches (from the basement garage up to the sixth floor) horizontally across the latch, leaving excess tape visibly sticking out on both sides of the door. (A vertical strip would have been hidden.) Security guard Frank Wills spotted the tape during his rounds, removed it (thinking it was left by maintenance), and later returned to find it retaped, prompting him to call the police. McCord had earlier been asked if he had removed all the tape and claimed that he had.

After Wills removed the initial tape, the team realised their error but proceeded anyway and retaped. They also waited for the departure of an intern (Bruce Givner) who was working late and making personal calls in the office.

Lookout Alfred Baldwin was stationed across the street at a Howard Johnson’s with a walkie-talkie. McCord turned the volume on his own receiver down, so Baldwin couldn’t effectively warn the team when police arrived. Baldwin initially ignored an unmarked undercover police car and only alerted Hunt later (who dismissed lights being turned on as “just the night guard”).

Once at the DNC office door, the team couldn’t pick the lock efficiently and instead removed the door from its hinges – a noisy, destructive method that revealed their desperation.

The five burglars (McCord, Barker, Gonzalez, Sturgis, Martinez) wore business suits and surgical gloves (to avoid fingerprints) but carried obvious burglary tools, cameras with 40 rolls of film, a police radio scanner, tear gas guns, and thousands of dollars in sequential $100 bills. This made them look like anything but ordinary burglars when they were finally arrested.

Police (an undercover vice squad) swept the floors, found the taped door, and arrested the men, who were hiding behind partitions. They surrendered under false names.

It’s one thing to inadvertently bring down a serving President. It’s another to imperil an entire currency and monetary system – which the US administration has now done, twice, in the last four years.

Unforced policy error #1 was the decision to freeze Russian sovereign assets – notably US dollars and US Treasury bonds – following the 2022 invasion of Ukraine. A government with a formal national debt approaching $40 trillion and dependent on the generosity of foreign sovereigns is poorly advised to signal that it can void those same assets on a whim.

Unforced policy error #2 was the February 2026 decision by the US to join with Israel and pre-emptively attack Iran. Not only did this reinforce doubts about US subservience to the Israeli lobby, it led to the not entirely surprising development of Iran closing down trade routes through the Strait of Hormuz. This, in turn, has pressured supply lines for (amongst other things) oil, LNG and fertilizers. In other words, the kinetic warfare is bad enough, but the knock-on effects could mean the starvation of thousands, if not millions, of innocent people.

From an investment perspective, some conclusions seem obvious. One of them is to limit exposure to naked fiat currency, which is likely to continue to lose purchasing power, especially if the war with Iran becomes protracted. (Even if it ends by the time you read this, the damage to the diplomatic and military reputation of the US – and by extension the US dollar – may be permanent.) Another is to limit exposure to government debt. So, what is our solution ? Pragmatic exposure to real assets (precious metals and cheaply priced commodities companies) together with classic ‘value’ equity and systematic trend-following funds for reasons of diversification and lack of correlation to ‘traditional’ assets. We recently had a pop at the intellectual rigour of Markowitz’s “efficient frontier” and its implicit sponsorship of government debt in an optimal portfolio, and we were not alone:

““Common wisdom” tends to push people into low return government debt, which significantly harms a saver’s financial position over time.

“Although people groan at the idea of thinking about investments and pensions, this is definitely an area where an ounce of prevention is worth a pound of cure. Spending a few hours now to avoid two common errors could translate into significantly (x2) better pension outcomes down the road. It’s no good spitting blood over the advisor that gave you bad advice, or the active manager whose costs killed your returns down the line..

“In addition to suppressing the incomes of millions of pensioners, the “efficient frontier” theory (along with other similar theories) also creates a captive audience for low/negative real return government debt in the shape of 40% of every portfolio of every single person who subscribes to the 60:40 convention. Public pension funds in particular have large portfolios of low return government debt and regularly report negligible returns that drag down the weighted average return for the pension fund..

“This captive audience will swallow endless amounts of government debt issuance. In the event of debt devaluation through inflation this captive audience (generally the great unwashed) will absorb 100% of the losses. This chicanery is aided by another (related) “truth”, namely the idea that lending to the government (buying T-bonds or gilts) is “risk-free” as in the risk-free rate. In reality, bonds carry risk and they will perform very poorly in an environment of rising inflation. At one point in 2022, the volatility of the largest bond Exchange Traded Fund (“ETF”) was higher than for the largest equity ETF..

“Whatever stage of your pension journey you are at, it is vital that you don’t load up your pension with under-performing “assets” like government debt and high fee/low performance funds. It is also important to have some view of what the world looks like going forward as developed market debt levels explode and government finances deteriorate in an environment of shifting geopolitical power. Sitting down with an advisor to tweak a portfolio from 60:40 to 70:30 isn’t going to cut the mustard and is likely to leave you in a significantly worse position in retirement.”

‘Nobody knows anything’. Now applies to Hollywood, politicians – and financial advisors.

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As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:

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Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.

Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and real assets, and also in systematic trend-following funds. The fund was “Highly commended” in Investment Week’s 2026 Fund Manager of the Year Awards.