Who is Ray DeVoe?

The name Ray DeVoe was mentioned by Warren Buffett in his FY2010 letter to Berkshire Hathaway shareholders.

Warren Buffett said: “We keep our cash largely in U.S. Treasury bills and avoid other short-term securities yielding a few more basis points, a policy we adhered to long before the frailties of commercial paper and money market funds became apparent in September 2008.”

Then touching on a Ray DeVoe view, he said: ” We agree with investment writer Ray DeVoe’s observation, “More money has been lost reaching for yield than at the point of a gun.” At Berkshire, we don’t rely on bank lines, and we don’t enter into contracts that could require postings of collateral except for amounts that are tiny in relation to our liquid assets.””

So who is investment writer Ray DeVoe ?

According to an obituary, Ray DeVoe was Raymond F. DeVoe Jr (1929-2014). He died on Sept 27, 2014, at the age of 85.

A Sept 30, 2014, Bloomberg report (Raymond DeVoe Jr, Newsletter Writer for 35 Years, Dies) said: “In a Wall Street career dating to 1955, DeVoe was a voice for investors looking for long-term stakes in undervalued companies. He said in a 2011 interview with Bloomberg News that David Dodd, co-author with Benjamin Graham of the value investing classic “Securities Analysis” (1934),  “was my finance professor and guidance counselor” at Columbia University’s business school.”

The investment writer wrote the DeVoe Report, a financial newsletter, for 35 years.

Warning investors to beware “the dead cat bounce”, Roy DeVoe once said: “If  you threw a dead cat off a 50-story building, it might bounce when it hit the sidewalk. But don’t confuse that bounce with renewed life. It is still a dead cat.”

Investopedia describes the dead cat bounce as “a temporary recovery from a prolonged decline or a bear market that is followed by the continuation of the downtrend”. 

According to Wikipedia, the earliest citation of the phrase in the news media dates to December 1985 when the Singaporean and Malaysian stock markets bounced back after a hard fall during the recession of that year. Journalists Chris Sherwell and Wong Sulong of the London-based Financial Times were quoted as saying the market rise was “what we call a dead cat bounce”. Both the Singaporean and Malaysian economies continued to fall after the quote, although both economies recovered in the following years.

The phrase was used again the following year about falling oil prices. In the San Jose Mercury News, Raymond F. DeVoe Jr. proposed that “Beware the Dead Cat Bounce” be printed on bumper stickers and followed up with a graphic explanation. This quote was referenced throughout the 1990s and became widely used in the 2000s.

“This applies to stocks or commodities that have gone into free-fall descent and then rallied briefly. If you threw a dead cat off a 50-story building, it might bounce when it hit the sidewalk. But don’t confuse that bounce with renewed life. It is still a dead cat. The spot oil price has recovered from under $10 a barrel to over $13 — but that also should not be confused with renewed life.”

— Raymond F. DeVoe Jr., San Jose Mercury News, 28 April 1986.