Saturday, May 26, 2007
Two Years of Blogging
It's been just over two years since I started this blog. I still remember this first post*. I didn't want to make some self-conscious introduction or try to worry about who might read it, I just jumped into a stock, and then another stock, and another. It evolved over time and took on a direction just based on incremental effort.
Looking at this blog got me thinking about what I've learned in the last two years about the process of blogging. I guess it makes sense to number them as "rules".
Rule #1 Go your own way
It's very tempting to see what other people are doing and to duplicate it. I spent a lot of time worrying about what I'm doing wrong in the blogging process compared to other bloggers, but I ended up just doing it my own way. It would be too difficult to do anything else.
Rule #2 Keep it real
This has been a lot more difficult to do than I would have expected. By "keep it real" I mean that the blog represents what's going on in my head and captures the things I'm looking at rather than a stylized, cleaned-up, presentation made after the fact.
What makes this difficult is exposing one's own mistakes, idiosyncracies, weaknesses, and biases to the world and not covering them up. It means making lots of small independent judgements plus big overall opinions about things largely unknown that you know could end up totally wrong, that someone else reading the blog is likely to know a great deal more about.
What makes this easy is that it requires almost no editing. I generally write a post as I'm thinking it through or as I'm going through SEC documents. I don't have to sit down and structure it more than a few changes here and there.
This rule has improved my abilities as an investor enormously.
Rule #3 Compare opinions with results
I need to get back to doing more of this again because I found it very useful to see how I viewed things vs how they eventually played out. It definitely has influenced how I view things nowadays.
Rule #4 Quantity is better than quality
This goes against what I would have expected. But I'd have to say that looking at hundreds of companies at a high level has been hugely valuable. But it's also helped to pick apart a lot of companies in detail, even when they didn't turn out to be investments.
Rule #5 Try out new ideas, discard ones that don't work
A lot of times I ask myself how I can better understand or structure the information. This led to the visual financial statements that use cheapass bar charts. A lot of the way I do things has evolved over time and it's easy to worry about being inconsistent, especially when discarding something that doesn't work well. But so what.
Rule #7 Don't sweat the unimportant details
The fact that there's no rule six would probably bother people. It's not important. The problem is knowing what details are important and what details are not. I think that's where Rule #4 comes into play. If you look at 100 balance sheets and see the same things over and over in certain types of companies, then when it happens again it's unimportant. On the other hand, if you've looked at 100 balance sheets and suddenly see something new, it jumps out without even thinking about it.
At some point, I should post about the thing that's probably most responsible for me becoming so much more focused on large amounts of information and patterns (very much along the lines of the book Blink). It's a really odd and unexpected thing, and Darwin could tell you what that means.
Rule #8 There are two important dimensions: companies and time
Here's where I've failed the most and it's where someone more like Warren Buffett can do much better. It's not enough to look at a large number of companies. To get the maximum results, it's important to follow them over time and look for opportunities as they occur. I need to figure out how to do better at this.
[I might add more rules in the future]
* the stock was selling for 1.5 cents at that time. It's now 7 cents. It's been as high as 48 cents in the past year: 30 bagger. Hehe.
Looking at this blog got me thinking about what I've learned in the last two years about the process of blogging. I guess it makes sense to number them as "rules".
MY RULES
Rule #1 Go your own way
It's very tempting to see what other people are doing and to duplicate it. I spent a lot of time worrying about what I'm doing wrong in the blogging process compared to other bloggers, but I ended up just doing it my own way. It would be too difficult to do anything else.
Rule #2 Keep it real
This has been a lot more difficult to do than I would have expected. By "keep it real" I mean that the blog represents what's going on in my head and captures the things I'm looking at rather than a stylized, cleaned-up, presentation made after the fact.
What makes this difficult is exposing one's own mistakes, idiosyncracies, weaknesses, and biases to the world and not covering them up. It means making lots of small independent judgements plus big overall opinions about things largely unknown that you know could end up totally wrong, that someone else reading the blog is likely to know a great deal more about.
What makes this easy is that it requires almost no editing. I generally write a post as I'm thinking it through or as I'm going through SEC documents. I don't have to sit down and structure it more than a few changes here and there.
This rule has improved my abilities as an investor enormously.
Rule #3 Compare opinions with results
I need to get back to doing more of this again because I found it very useful to see how I viewed things vs how they eventually played out. It definitely has influenced how I view things nowadays.
Rule #4 Quantity is better than quality
This goes against what I would have expected. But I'd have to say that looking at hundreds of companies at a high level has been hugely valuable. But it's also helped to pick apart a lot of companies in detail, even when they didn't turn out to be investments.
Rule #5 Try out new ideas, discard ones that don't work
A lot of times I ask myself how I can better understand or structure the information. This led to the visual financial statements that use cheapass bar charts. A lot of the way I do things has evolved over time and it's easy to worry about being inconsistent, especially when discarding something that doesn't work well. But so what.
Rule #7 Don't sweat the unimportant details
The fact that there's no rule six would probably bother people. It's not important. The problem is knowing what details are important and what details are not. I think that's where Rule #4 comes into play. If you look at 100 balance sheets and see the same things over and over in certain types of companies, then when it happens again it's unimportant. On the other hand, if you've looked at 100 balance sheets and suddenly see something new, it jumps out without even thinking about it.
At some point, I should post about the thing that's probably most responsible for me becoming so much more focused on large amounts of information and patterns (very much along the lines of the book Blink). It's a really odd and unexpected thing, and Darwin could tell you what that means.
Rule #8 There are two important dimensions: companies and time
Here's where I've failed the most and it's where someone more like Warren Buffett can do much better. It's not enough to look at a large number of companies. To get the maximum results, it's important to follow them over time and look for opportunities as they occur. I need to figure out how to do better at this.
[I might add more rules in the future]
* the stock was selling for 1.5 cents at that time. It's now 7 cents. It's been as high as 48 cents in the past year: 30 bagger. Hehe.
// posted by Bruce @ 2:56 PM 
Comments:
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Bruce -- thanks for the link ....
I would say I only have two rules as or right now .....
#1) must enjoy this process since the time and effort to financial reward ration is currently zero and will likely stay that way
#2) post often .... i tend to stop checking blogs that have not posted in 1 to 2 weeks
if you have any comments/critisisms/suggestions please leave a post or email at offthebeatenpathinvestments@gmail.com
thanks again
I would say I only have two rules as or right now .....
#1) must enjoy this process since the time and effort to financial reward ration is currently zero and will likely stay that way
#2) post often .... i tend to stop checking blogs that have not posted in 1 to 2 weeks
if you have any comments/critisisms/suggestions please leave a post or email at offthebeatenpathinvestments@gmail.com
thanks again
actually, now that I think about it .... the time and effor to financial reward ratio is not zero its #n/a .....since you can't divide something by zero
For #1, I'd say that the time and effort vs reward is unpredictable. However, I know that just walking the process will result in a good payoff. The thing is that the payoffs are enormous when they happen. I made a sick amount of money on CXTI: that alone has more than justified all the effort I've put into this blog since day one. And Strathmore has paid off extremely well so far, too.
I believe most of the payoffs are in the future: CEDA or CFRI or BKBO will likely provide excellent returns, and I expect a great deal more from Strathmore. I also expect CVU to do well going forward, but that's not associated with this blog. It was a VIC choice, and the guy who picked it now disavows it as an investment.
I don't invest for quick returns and I don't expect them. I see a lot of people hopping around trying to catch something going up. If they're successful, then 'good for them'. I can't play that game.
Last year around this time, someone on Motley Fool's Berkshire board asked me about my returns based on this blog. I had to report honestly that they hadn't been very good at that point.
If I had to be graded right now on the performance of the investments I dredged up, one is up 32%, one is down 12%, the other two are essentially flat. There were two other ones that I bailed out of: one for a 20% gain and the other for about an 8% loss. A stock unrelated to my exhaustive search (that I owned well beforehand) is down by 53%. So my grade as of today for the past year and half wouldn't be very good.
Yet by the end of the year, the results were spectacular. If you want to judge performance, you need to step back and look at the long term. Unfortunately, that means waiting a long time and getting bumpy, unexpected results in the meantime.
I believe most of the payoffs are in the future: CEDA or CFRI or BKBO will likely provide excellent returns, and I expect a great deal more from Strathmore. I also expect CVU to do well going forward, but that's not associated with this blog. It was a VIC choice, and the guy who picked it now disavows it as an investment.
I don't invest for quick returns and I don't expect them. I see a lot of people hopping around trying to catch something going up. If they're successful, then 'good for them'. I can't play that game.
Last year around this time, someone on Motley Fool's Berkshire board asked me about my returns based on this blog. I had to report honestly that they hadn't been very good at that point.
If I had to be graded right now on the performance of the investments I dredged up, one is up 32%, one is down 12%, the other two are essentially flat. There were two other ones that I bailed out of: one for a 20% gain and the other for about an 8% loss. A stock unrelated to my exhaustive search (that I owned well beforehand) is down by 53%. So my grade as of today for the past year and half wouldn't be very good.
Yet by the end of the year, the results were spectacular. If you want to judge performance, you need to step back and look at the long term. Unfortunately, that means waiting a long time and getting bumpy, unexpected results in the meantime.
Bruce --
i agree with everything you said ....I have been investing personally and professionally for over 10 years so I have some rough return expectations for my personal investment account .....i use a moving 3 year period .... when I said returns i meant directly from the blog not investments in general ....by the way how are the fool boards, i think they are paid now....if they are, is it worth it?
i agree with everything you said ....I have been investing personally and professionally for over 10 years so I have some rough return expectations for my personal investment account .....i use a moving 3 year period .... when I said returns i meant directly from the blog not investments in general ....by the way how are the fool boards, i think they are paid now....if they are, is it worth it?
I've never actually paid for The Motley Fool. I don't know what their formula is, but some of the members with high recommendation rates and/or high favorited rates get free membership. They haven't asked me for money in all these years, but I've been posting less and less, so I might fall off the free list before long.
The only place I go on Motley Fool is the Berkshire Hathaway board, which has always been a place for Buffett-style investors regardless of whether they own BRK stock or not. Slowly over time that board has become more and more dogmatic. There's still good stuff on it, but not as much.
If I lost my free membership I doubt if I'd continue with it.
Lots of people are involved with the other stuff like Hidden Gems, which I know nothing about.
The only place I go on Motley Fool is the Berkshire Hathaway board, which has always been a place for Buffett-style investors regardless of whether they own BRK stock or not. Slowly over time that board has become more and more dogmatic. There's still good stuff on it, but not as much.
If I lost my free membership I doubt if I'd continue with it.
Lots of people are involved with the other stuff like Hidden Gems, which I know nothing about.
At some point, I should post about the thing that's probably most responsible for me becoming so much more focused on large amounts of information and patterns (very much along the lines of the book Blink). It's a really odd and unexpected thing, and Darwin could tell you what that means.
By all means, I'd love to hear more about this. Love the blog. Keep up the good work.
By all means, I'd love to hear more about this. Love the blog. Keep up the good work.
# posted by 
: 5:40 PM, May 31, 2007
: 5:40 PM, May 31, 2007
Love the blog. Your efforts reminded me of this exchange between "Adam Smith" and Warren Buffett.
http://valuevista.blogspot.com/2007/06/warren-buffett-50-returns.html
The Adam Smith interview? It aired in October 1993, and it went like this:
Adam Smith: If a younger Warren Buffett were coming into the investment field today, what areas would you tell him to point himself in?
Warren Buffett: Well, if he were doing – if he were coming in and working with small sums of capital I’d tell him to do exactly what I did 40-odd years ago, which is to learn about every company in the United States that has publicly traded securities and that bank of knowledge will do him or her terrific good over time.
Smith: But there’s 27,000 public companies.
Buffett: Well, start with the A’s.
http://valuevista.blogspot.com/2007/06/warren-buffett-50-returns.html
The Adam Smith interview? It aired in October 1993, and it went like this:
Adam Smith: If a younger Warren Buffett were coming into the investment field today, what areas would you tell him to point himself in?
Warren Buffett: Well, if he were doing – if he were coming in and working with small sums of capital I’d tell him to do exactly what I did 40-odd years ago, which is to learn about every company in the United States that has publicly traded securities and that bank of knowledge will do him or her terrific good over time.
Smith: But there’s 27,000 public companies.
Buffett: Well, start with the A’s.
Valuevista, that's a great quote. The first time through, I intentionally left the letter "A" for last because others might have started with "A" and given up before reaching "B". I figured "A was picked over.
It's very tempting to see what other people are doing and to duplicate it. I spent a lot of time worrying about what I'm doing wrong in the blogging process compared to other bloggers, but I ended up just doing it my own way. It would be too difficult to do anything else.
How did you build your blog's readership over time? How did people find you?
Your wite-up seems to emphasize the self-generated benefits from the discipline of putting your thoughts to "paper", providing a record of your thinking to review later, etc.
What other benefits do you get from the blog that come from readers, if any?
How much does the blogging slow your investment process?
How did you build your blog's readership over time? How did people find you?
Your wite-up seems to emphasize the self-generated benefits from the discipline of putting your thoughts to "paper", providing a record of your thinking to review later, etc.
What other benefits do you get from the blog that come from readers, if any?
How much does the blogging slow your investment process?
# posted by : 5:58 PM, June 09, 2007
: 5:58 PM, June 09, 2007
"How did you build your blog's readership over time? How did people find you?"
In the early days I actually discouraged people from finding the blog. Then I started mentioning it on Motley Fool. But I still don't particularly want a large readership.
A lot of the readers are here due to searching for obscure companies that I've followed.
I do get a lot of readers from brokerages and fund management companies. One reason to keep the Sitemeter private is to protect them from disclosure (they probably don't care too much, but I figure why not).
One thing I'll say is that people from the best think tanks in the world (generally leading companies in new technologies) are the ones who really plow through this blog in great detail, sometimes spending many hours going through hundreds of links. That happens about once a month.
"What other benefits do you get from the blog that come from readers, if any?"
Knowing that people with detailed investment knowledge read the blog is good motivation to do things well and not to cut corners too much. It keeps me honest and more dilligent. I've been writing fairly regularly on the Internet since the early 1990s and it's become a habit.
Sometimes people will point out mistakes that I've made, which can be a huge help.
"How much does the blogging slow your investment process?"
It doesn't. If anything, I've done more by using the blog than I would have done otherwise. What slows me down the most is probably the [mistaken] notion that I'm already fully invested and that I like the stocks I currently own so looking at more of them is pointless. That's the wrong view and it will likely cause my results to be worse than if I kept going full-speed.
In the early days I actually discouraged people from finding the blog. Then I started mentioning it on Motley Fool. But I still don't particularly want a large readership.
A lot of the readers are here due to searching for obscure companies that I've followed.
I do get a lot of readers from brokerages and fund management companies. One reason to keep the Sitemeter private is to protect them from disclosure (they probably don't care too much, but I figure why not).
One thing I'll say is that people from the best think tanks in the world (generally leading companies in new technologies) are the ones who really plow through this blog in great detail, sometimes spending many hours going through hundreds of links. That happens about once a month.
"What other benefits do you get from the blog that come from readers, if any?"
Knowing that people with detailed investment knowledge read the blog is good motivation to do things well and not to cut corners too much. It keeps me honest and more dilligent. I've been writing fairly regularly on the Internet since the early 1990s and it's become a habit.
Sometimes people will point out mistakes that I've made, which can be a huge help.
"How much does the blogging slow your investment process?"
It doesn't. If anything, I've done more by using the blog than I would have done otherwise. What slows me down the most is probably the [mistaken] notion that I'm already fully invested and that I like the stocks I currently own so looking at more of them is pointless. That's the wrong view and it will likely cause my results to be worse than if I kept going full-speed.
I do get a lot of readers from brokerages and fund management companies. One reason to keep the Sitemeter private is to protect them from disclosure (they probably don't care too much, but I figure why not).
I did not understand that comment. You keep a sitemeter that allows you to see the isps of readers, but readers can't see other readers isps? How does that protect them?
Thanks for the responses.
I did not understand that comment. You keep a sitemeter that allows you to see the isps of readers, but readers can't see other readers isps? How does that protect them?
Thanks for the responses.
# posted by : 8:02 PM, June 09, 2007
: 8:02 PM, June 09, 2007
Well, it's possible for someone from a high profile site to not want everyone to know what they're looking at, especially since a lot of visitors will often focus on a specific company that I invest in. I don't mention specific visitors or what they look at, except in aggregate groups. I may have mentioned one particular visitor (I couldn't find it in a quick check) where that visitor was directly related to the issue in the post.
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