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On Top of His Game: James Melcher ’61 Feints, Invests

By Jonathan Lemire ’01

James Melcher '61

James Melcher ’61, chairman of New York's august Fencers Club, says the sport keeps his mind 'cool and calculating.'

PHOTO: PAUL ORATOFSKY

Strategize. Defend. Adjust. Attack.

The tenets of Olympic fencing, or the guiding principles of a successful hedge fund?

The answer, according to James Melcher ’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.”

Within weeks of arriving at the College from his family’s home in western Massachusetts, Melcher began his decades-long love affair with fencing. “Every young guy wants to try to wave a sword,” he says. “I took to it immediately.”

But there was a problem: Though enthusiastic about his new sport, Melcher wasn’t all that good at it. “Many of the top fencers had been doing it since childhood, so starting your freshman year is tough,” he says. “I had no notable successes at Columbia, but I liked it very, very much.”

Staying in New York after graduation, the former English major logged long hours in the financial world while cramming in all the practice time he could at a local fencing club. Most of his nights and weekends were spent at the Fencers Club on W. 25th Street, the oldest fencing association in the nation. After several years of lessons from Hall of Famer Michel Alaux, Melcher made the stunning leap from a solid though unspectacular college fencer to a force on the world stage.

“Things started to click for me, and I broke through as a top fencer when I was about 30,” Melcher says. “In other countries, these [fencers] are full-fledged professionals. It was hard to compete as an amateur.”

Melcher specialized in the épée, which is the name for the sword — it features a stiff, 90-centimeter blade — and the event, the only fencing category in which the entire body is a valid target. First making a name for himself by defeating the world’s No. 1 fencer in the 1970 Martini Challenge, Melcher became a two-time national champion and qualified for the 1972 Olympics.

The upstart American épée squad shocked a favored Romanian squad in the first round, only to lose to the eventual bronze-medal-winning Soviet team. But the entire games already had been overshadowed by the murders of 11 Israeli athletes by Palestinian terrorists.

“A pall of sadness fell over the entire event,” Melcher says. “Many people thought we should cancel, but I thought doing so would hand a victory to the terrorists.”

Melcher’s competitive fencing career ended in 1974 when he developed chronic fatigue syndrome (he has since recovered), but his love for the sport has continued unabated. He became the chairman of the Fencers Club in the late 1970s and held the post for a decade, then reassumed its leadership in 2006. The 225-member club regularly produces close to half of the country’s Olympic team members.

Though the club predictably draws some of its crowd from Wall Street, it reaches out to minority neighborhoods to diversify a membership whose fencers already range from as young as 7 to as old as 80, Melcher says. And, he added, a steady flow of fencers annually follow in Melcher’s footsteps from Columbia.

“We have would-be Olympians and a proud Olympic tradition but we also have those who simply use it to stay sharp mentally and physically,” says Melcher, 67, who lives on Manhattan’s Upper West Side with his wife, April Benasich, a prominent neuroscientist. The couple has two children and two step-children, including Elizabeth Melcher Luckett ’90.

“I had stopped fencing for a time, but I came back to it three years ago and it instantly made me feel 10–15 years younger,” says Melcer. “Now, I have to fence two or three times a week — I don’t want to feel that old again.

“It keeps my mind cool and calculating, and I’m making tactical decisions at lightning speed. I’ll never stop.”


Jonathan Lemire ’01 a frequent contributor to CCT, is a staff writer for The New York Daily News.

 

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