Most bloggers eventually get ’round to answering the question ‘Why do you write?‘. If I recall, I’ve made plenty of related asides & comments myself (damn, I wish I had ‘em to hand!) over the past year – but high time for a proper post, eh?!
As I mulled over this post, I came to a surprising realization – I guess the origin of the Wexboy blog actually stretches waayyy back. At one point, I wrote a daily market commentary for a number of years. Seemed like a good idea at the outset – oh, what sweet & naive foolishness! If you’ve tried it, you’ll know writing a daily 7 am commentary becomes a rather daunting (& boring) prospect pretty quickly! But it wasn’t something I could quit once I’d started, and whining about writer’s block wasn’t a feasible option either. So – my solution?
The old Mae West – I quickly drifted… My commentaries began to include anything & everything that took my fancy: Stocks, dumb celebrities, current affairs, political lampoons, hangover cures, primers on technical analysis, etc. Anything to distract & entertain myself as I tried to nail down a picture of the market each day/week. Over time, I’d indulge myself with various series & running gags. I’d often anthropomorphize the markets in terms of movies, celebrities, farming, whatever..! USD/JPY moves & intervention were huge then – I vividly recall writing Godzilla mini-plots to explain exactly (?!) what was going on in the markets.
I do recall the institution I worked for was rather staid – lawks, they still had bloody tea ladies when I left! I’m sure if anybody senior enough had ever read those commentaries, I’d have been rapidly replaced as author & perhaps employee. But, like with most companies, that would have completely missed the point… Because I’d actually discovered, to my astonishment, something very valuable:
First, I realized the very act of writing about the market – no matter how jocular my tone – actually crystallized my own market opinion & trading strategies. And I was able to measure this effect as a tangible improvement in my P&L. You know, I’m all for education, but regular education methods bore me to tears – I’m definitely an autodidact. Which might explain why I wasn’t happy with the notion that simply setting something down on paper could actually complement my own mental analysis. I actually fought the idea for some time – but in the end the evidence was inescapable, and it impressed me profoundly…
Second, I connected with readers – it established genuine relationships. Time & again, they’d refer to a line I’d written, or an entire commentary. I’m sure it wasn’t intended as praise in many instances, but who cares – out of all the crap they received each day, they actually remembered what I’d churned out half-asleep at 7am! Simply because…I didn’t censor what I was thinking & typing?!
It also taught me, accidentally, the best client sales & relationships technique ever. I’d make client/sales visits occasionally, and sometimes things would really click. I finally figured out this was inevitably when the clients were comfortable (in their office, i.e. on home ground) & relaxed (afternoons, Thursday or Friday). We’d always have a laugh over my commentaries, which often segued into a couple of hours of just shooting the shit – all business totally forgotten… But you know what? I always ended up doing my best new/recurring business with those guys after!
This confirmed I could actually do sales…except, really, I simply wasn’t that interested! I just preferred to approach everything as a relationship from day one. [btw If you work purely in sales, I wouldn't recommend it - I'm confident some idiot sales manager will make your life a misery/fire you before all those deals close! Can somebody please start a Twitter a/c, or website, about those dicks? I'm sure a compendium of sales managers' quotes & ideas would be immensely entertaining for all in the corporate world. Go on, tell me it exists already - send me a link!] And I learned the only paid work ever worth a damn is where you have fun & actually enjoy yourself – if others around you are doing the same, so much the better!
OK, you’ve let me ramble on a bit – let’s return to the 2000s, the blog, and why I write:
- To crystallize my thinking on an investment. I’ve always got plenty of potential buys floating ’round my head, and they’re always duking it out… So I watch & wait for stocks that come out on top & seem to write themselves up. As I’ve said, somehow the act of sitting down & getting it all down on paper is a vital/final step in helping me make (& endorse) a buy decision. This certainly isn’t unique. I’ve lost count of the number of top-class investors who counsel you should always write down your investment thesis before pulling the trigger. No need to be a blogger, or even a message boarder – just keep a file to hand with a page or two for each investment, and just review each investment thesis regularly & critically. Seriously, just do it!
- To actually test my investment thesis. If you’re having difficulty nailing down a thesis on paper, ask yourself why? If it doesn’t sound compelling or convincing, or your thesis is far longer/shorter than you expect, what does that tell you? If it’s too difficult, maybe it’s time to just move on – there’s always something cheaper, easier & safer, if you keep searching. My recent writeup on Tetragon (TFG:NA) was probably one of my longest – certainly not the easiest of stocks to get one’s head around, and it took far longer than expected to cover all the facts & figures, and pros & cons.
TFG’s inherent leverage was on my mind, but the challenges of my writeup were also a warning to limit the size of my stake. Note that was a risk/sizing decision ultimately – if I couldn’t complete/get comfortable with a decent writeup, that would simply be a warning not to hold the stock at all…
- To see/hear the other side of the argument. If I don’t set things down on paper, if I invest in a vacuum, personally I find it much more difficult to picture and/or explore the downside/risks of a high potential stock. But the minute I plan to publish an investment thesis, I can immediately do a much better job of anticipating readers’ objections & counter-arguments. I spend a lot more time considering if there’s a better/safer peer stock which readers might know about – so why wait, let me find it now! And after publishing, somebody will inevitably email/comment with useful and challenging points & questions.
- To stay honest with myself as an investor. The mind’s ruled by emotions – specifically, fear & greed – just as much as logic, if not more. It will do anything to avoid pain. It has no problem deceiving you, if you let it. Once you start investing, it will happily encourage you to cut your winners, run your losers, diversify/risk too much or too little, abandon your original investment thesis, etc. Set things down on paper, and it’s hard to escape your original facts, figures & thesis. If you got those wrong, and/or the circumstances change significantly, the mind is always happy to give you a free pass – but paper will hopefully force you to man up & make a real decision.
- To be transparent with readers, by setting a few simple parameters: i) disclose the size of my portfolio stake (in %), ii) disclose any subsequent buys/sells in a timely manner, and iii) measure performance consistently. This, of course, is your sheet of paper multiplied! It shines a giant mirror on my portfolio – sometimes not so welcome, but boy does it ever concentrate the mind!
The size of my portfolio stake is perhaps most important. Many bloggers don’t reveal that info, or even confirm whether they own the stock. That’s a shame – I read lots of good stock write-ups, but then there’s nothing against which I can judge the writer’s level of conviction. To illustrate, if I blogged about a stock offering 300% upside, you’d read it – yes?! But if I confirmed I owned i) a 1% portfolio holding, or ii) a 10% portfolio holding, I guarantee your reaction & opinion would be v different in each instance – correct?
- To be sharper in my investment monitoring & decision-making. Once I write-up a stock, it’s part of my portfolio performance, and I know I’ll eventually end up publicly selling it covered in glory…or shit! That really makes you think twice. And that’s no bad thing – we’re talking about investing here, not trading, there’s always plenty of time to think thrice even…
I’m less inclined to buy boom/bust stocks, or I’ll severely limit my holding – generally, that’s turned out to be a good thing. If I’m contemplating a stock, sector, or investment theme that seems likely to prove controversial, I’ll think about it a hell of a lot more first, and spend far longer considering the pros & cons. And I’m far more prompt now in assessing the impact of price moves & news items, and in forcing myself to update my intrinsic valuation and/or increase/decrease my holding, if appropriate.
- To be that much more detail-oriented. I’ve always been pretty meticulous, and trading hammers the lesson home, but blogging adds another level of pressure & scrutiny. Personally, I’m amazed how many times I check facts & figures now, and take copious notes, before publishing. I mean, who wants a silly mistake pointed out to them five minutes later?!
I must have an old school attitude, anyway: I tend to believe any errors re facts, figures, spelling, whatever – however minor – will always detract from your presentation, or argument. [I could never bring myself to interview anybody with glaring spelling mistakes on their resume!]. And v occasionally, all it takes is a simple error, or misunderstanding, to undermine your whole investment thesis. [Again, I'm reminded of work & telling my staff: 'I don't bloody care how long it takes to triple-check everything each day - would you prefer to stay here all night fixing a ####ing mess instead?']
- To escape message-board hell. Investing tends to start out as a relatively solitary exercise. Hopefully, you’ll find a like-minded buddy/work colleague or two who’ll act as mentors, or enthusiastic co-investors & students. Eventually, we all graduate to message-boards. At first, they appear a wonderfully social place to swap ideas, knowledge & experience. And God bless ‘em, there are plenty of people trying to uphold that ideal – I salute them – but they’re drowned out by the poisonous & vacuous chatter of the 99%. Honestly, I was surprised to see message boards cited as a useful tool in quite a few Free Capital profiles. Personally, I’ve pretty much given up on it – or maybe I was just never smart or engaged enough to find much value there.
Anyway, once I reached that point – and with the kind encouragement of a couple of bloggers – graduating to my own blog made perfect sense. This doesn’t mean you have to become a blogger too – there’s a wonderful, but dispersed, universe of like-minded investors out there commenting on blogs, and it’s a remarkably pleasant & rewarding experience for all concerned.
- To continue/finish off with that point, most of all I wanted to connect with readers. Blog readers are definitely self-selecting – you get the best of the bunch out there in terms of investors, and the most engaged readers often think & invest in a similar fashion. That’s not to suggest we’re all singing the same note – having a like-minded investor (respectfully) challenge your thesis, or suggest another stock or perspective to consider, is all the more reason to sit up & take notice. It also means you hear a lot more/different perspectives & stock ideas.
And I’m passionate about investing, particularly value investing, so I’m always delighted to respond to any reader who’s been hitting the books & is now trying to translate all that into their own investing. Hard-core investing can be a fairly intense & solitary activity, anyway – helping investors who are just starting out, and/or swapping ideas/comments with readers & other bloggers, broadens one’s investing world immensely. Then there’s the occasional opportunity to collaborate with your investing peers, and even to meet them (over a few beers, of course!) – I find that most rewarding of all… And it probably means one or two less conversations about stocks that I inflict on the missus!
Filed Under: Value Investing,