On a mission to interview some of America's most influential investors...
Our interviews with successful investors have been very popular with the Stockopedia community over the past couple of years. From the messages I get from readers, the Q&As seem to offer a welcome human perspective on investing. Sometimes you just can’t beat reading about the journeys that these investors have been on. And while you may or may not like their strategies, it’s still enlightening to hear about why they think and act like they do.
This is great news for me because I like doing these interviews very much (and there’s at least some job security in it!). But is has always been undeniable - and Ed and I have talked about this many times - that some of the biggest and most interesting characters in investing are in the United States.
In fact, it isn’t just that America is home to some very inspiring investors. It’s that a lot of the thinking and discussion around investing in the US echoes so much with what we think and talk about here at Stockopedia.
Factor investing was predominantly born in America. Some of the most important observations in human behaviour were made in the States. And it was researchers there that began to tie these issues together and work out what successful long-term investing really requires.
In many ways, evidence-based, rules-based investing is still relatively new ground in the US. In a market super-focused on quarterly financials, talking heads on TV and more information than you could ever possibly consume, switching off from it all is still quite radical. But there are some very inspiring people leading that charge.
With this in mind, I’m travelling to the US this weekend on a two-week mission to interview some of them. It has taken months to organise. Some of these people I knew… others are very graciously (and bravely) talking to me without, I suspect, really having any idea who I am, or who we are!
It’s a trip that’s going to take me from New York to Los Angeles. Considering the distance, there’s still a sense of unpredictability about the schedule. I’m slightly winging it, and I’m still not entirely sure how it’s going to go (the job security might be taking a turn for the worse!).
Without trailing too much of this, all being well I’ll be doing interviews over the next week or so with people like James O’Shaughnessy of O’Shaughnessy Asset Management, Wes Gray of Alpha Architect, Barry Ritholtz of Ritholtz Wealth Management and Toby Carlisle of Carbon Beach Asset Management, plus several others.
In amongst that I’ll be attending EBI 2018, which is an investing event that is part of the Global Indexing & ETFs conference - and I’ll be doing more interviews there. It’s an impressive conference with some very interesting people on the speaker line-up.
One of the things I’ve learned over the past three months is that no matter how hard you try to pin down a schedule for something like this, you won’t really know it until the day before you leave. So if you have got any questions for the investors that I mentioned, or even suggestions for other interviews, feel free to let me know. Hopefully this trip will just be the start of speaking to some of America's most influential investors.
The other thing I learned is that when planning a work trip to sunny California, no-one in the office listens when you complain about how much hard work it’s turning out to be!
All being well I’ll be blogging here as this trip unfolds.
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11 comments
Ben, Maybe you could work some questions from my thoughts.
When to you run your winners and when do you sell? When you look at a chart, what influences your thought process on whether this share will rise or fall.
Do you chase the big winners, given that only a very small proportion of the total market will rise by more than 100% in any given year?
Do you have rigid rules in stock selection to identify purchases or do you use factors to produce a list and then use other criteria to narrow this down?
With factor investing, there are many different approaches which produce different ideas. When you follow one system, how do you feel about great successes that your system has not identified and you have missed the opportunity?
Do you use stop losses
Do you take any particular action in the event of market corrections or do you ride them.
Stocks that achieve large gains very often have poor fundamentals at the start. How do you screen for the early signs of significant growth.
Ben, most of your interviewees will be running large funds. Most of Stockopedia subscribers, like me, will be private investors with relatively small holdings. Do your experts have any views on how we can gain an advantage by being nimble or in other ways over the larger funds.
I am now looking forward to your trip as much as you are!
Trevor
You raise some very important points. Most of these answers are found in Mark Minervini`s book `Trade like a Stock Market Wizard`. The title of the book is a bit of a misnomer as it is all about a clearly defined and disciplined investment strategy and not trading. Everything is very clearly described and the book is an easy read. You can use parts of the strategy or all of it. It works exceptionally well, especially with reference to Stockopedia as well.
It is for the techno-fundamentalist approach. My view is that using one without the other is a bit like being a one legged man in a butt kicking contest.
Thanks, zeibots. I have a good collection of books and will re-read both of Mark's books again. In any case, it would be interesting to note the opinions of those who Ben might meet.
Just received this morning, a book by Berkin and Swedroe - heavy ready unlike Minervini.
Hi Ben,
I like the message of Carey Blunt above. It would be great if you interview James O'Shaughnessy and Patrick O'Shaughnessy. Of particular interest would be:
1. How do they master emotions?
2. How long do they spend analysing a stock from other perspectives besides quant-driven ideas?
3. Is the availability of information and computing power rendering the markets more efficient hence diluting the effects and the edge that factor and quant investing give to factor-based investors?
4. Do they stay invested whatever the markets say i.e. bull/bear/crash?
5. What are the new developments/future outlook of factor investing?
Of course, Wes Gray and Toby Carlisle are great masters. If possible it would also be interesting if you could include Joel Greenblatt who does have a quant/factor based approach too in some of his picks.
Another American who comes to mind is Phil Town but he is more of a Warren Buffet style of investor.
All in all this is a great initiative by Stockopedia and I wish you a great trip Ben!
Safe and happy travels,
Kiewit
Ed, perhaps a couple of writers for AAII would be interested in talking. James Cloonan is the retired founder and has just published a book based on a lifetime of investing and managing the AAII Shadow portfolio. He also has an options trading background. Charles Rotblut has an accounting background and has very good insights into all aspects of investing. He would agree on the Value- Growth-Momentum approach. There are other regular contributors covering dividend stocks etc. Mostly a long term approach. The subscriber base is mainly retirees/baby boomers so they publish a lot of information about "surviving retirement" and taxation - however with a US slant of course.
Forbes magazine have had some interesting contributors. One of my personal favorites is William Baldwin - I have done well with his ETF and CEF picks - thanks to his rigor & depth of knowledge.
Perhaps more importantly - a vast array of top notch contacts and access to a library of research and articles.
Safe Travels.
Dave
Ben,
At least as interesting or maybe even more interesting than interviewing James O'Shaughnessy would be to interview Patrick O'Shaughnessy who is the current CEO of O'Shaughnessy Asset Management. Maybe you can get 2 interviews for the price of one!
Patrick is a massive quant driven investor and I think a "like mind" for the Stocko community. If you haven't already then I suggest listening to his "Invest like the Best" podcast to get an idea of what I mean.
I've always felt that if Patrick was to meet Ed Croft then it would be a great meeting of like minds. So maybe set that up while you are there, maybe Ed could be a guest on Patrick's podcast.
cheers
Carey
Ben, I can't comment on your last interviewee, but am familiar (from their excellent US podcasts) with the other 3.
James O’Shaughnessy - A very clever previously Value proponent
Wes Gray - A Vaue and Momentum specialist
Barry Ritholtz - Great interviewer and flexible with his investment approach
I suppose the big question over there is whether Value investment is dead and if so what has replaced it, (at least for the moment?).
Consigned to the colonies eh Ben - poor you. It's a tough old job, but I guess somebody has to do it.
It's not quite on theme, but I wonder if Carson Block from Muddy Waters (somewhere in CA) would give you some time? He's not a style guru, but is apparently well thought of as someone who uncovers frauds (although independent evidence appears a bit short).
Personally I suspect that he may be a charlatan given that I only discovered him via him : 1. Taking out a short on IQE, 2. Republishing with embellishments a Dodgy analysis by Matthew Earl , 3. Closing his short immediately after the price reaction.
I am probably unduly harsh i my assessment and given that he relied on his "reputation" to transact the above trades he might be prepared to discus his methods.
As I say, it may not be on-topic for your trip but if you were able to catch up I would certainly welcome it.
Hi Ben,
The two investors who have had the most influence on my investment style are Mark Minervini and William O`Neil.
As you know both are Techno-Fundamentalists. We already have a O`Neil-esque guru site on Stockopedia but that is based on fundamentals so it does not tell the full story and also not the precise timing of entries and exits, but even so it is useful for growth investors like myself. Minervini- esque would also be a useful addition.
For both of these guys it`s all about the timing and very much both volume and trend analysis related. That is the techno part of these strategies.
Currently the techno part is a weakness of Stockopedia judging by the correspondence and the discussion groups.Even so I would never wish to be without my Stockopedia subscription, it is a superb site. I wonder if there are any of you out there who have a foot in both camps ?
I would say I have a big foot in both camps zeibots... Fundamentals first, but with a thick serving of technical analysis for the purposes of timing and setting of share price potential...
Mind you, I like to keep the technical analysis side of things simply, looking at trends, clear identifiable chart patterns like triangles and gaps, and obvious horizontal resistance levels...
Edmund
Yes Edmund, for technical analysis simple is best, many investors and traders confuse themselves by trying to be too clever. Minervini keeps it quite simple, like having the 50,150 and 200 MAs all in that order and below the price action, the basis of a good trend. I like to use WEEKLY volume indicators namely Acc/Dist, On Balance Volume and +ve Vol to take out the market noise. Amazing how often after accumulating good profits you can close a position when the big boys like pension funds,investment funds etc leave their mark when they start distribution instead of accumulation , even before the price declines.