First, I am going to use Revue as long form Twitter. If edited and clean content is what you are looking for then I am about to disappoint you.
The Business Brew
This Week’s Podcast with Denise Shull was different but I highly recommend listening. Yeah, you have to hear me talk about myself some. On that note, I probably could have revealed a little more but I’m not sure the personal risk/reward is there. Back to the pod, Denise drops some real knowledge about the mental side of investing and trading. A good plan without execution is worth nothing. Denise’s advice is likely to help with execution. So listen.
I will host a Space from 4-5pm EST on Monday, 1/10/22, to recap the episode and discuss thoughts with fans.
Onto the rest of the post/Revue…
As 2022 starts, I continue to think of easily avoided mistakes from 2021; at least from an investing standpoint. Life wise, I was actually quite smart and cleaned a lot of necessary odds and ends up. Further, the pod seems to be something people enjoy (and I do too). On average it would be hard to argue 2021 wasn’t my most productive year as a human. But boy was I stupid with some market moves (OR I am resulting).
Spending too much time debating investment idea (on Twitter and generally). I tend to like unloved ideas. I am not particularly comfortable when people like the businesses I own. So I don’t know why I spent so much time debating some of the ideas I have. Time will tell so from now on I am just going to let time do its thing.
I’m not alone here but I give myself an F for entering and managing my Altice decision. My primary mistake was not trusting myself. My secondary mistake was coming into the idea with motivated reasoning. I wanted to have a new idea and people I have followed/talk to/respect liked the idea. Further, I have been reasonably successful in cable (though much of that was an idiosyncratic bet on Charter when people puked it).
At the end of the day, I told myself the stock was cheap enough to justify overlooking an expert interview that had some very alarming anecdotes (saying Altice had “cut to the bone” and had serious morale problems). As a quick aside, had I listened to my intuition from that interview I would have saved the cost of the subscription to that expert network. More importantly, before I was actually comfortable with the idea for myself I outsourced some conviction. Then I made jokes about how bad performance was rather than selling (which I think is appropriate when investing in levered equities). Finally, when Dexter appeared at the infamous Goldman Conference I texted friends saying “He looks like he got caught cheating on his wife and has to apologize publicly.” What didn’t I do? Sell before any words came out of his mouth. I should have.
My recent podcast with Denise Schull discussed the power of intuition. Time and time again I fought against my intuition because of some combination of greed, motivated reasoning, and the desire to outperform. Stupid, stupid, stupid!
All that said, I may own Altice again. But this time it’s going to be because I want to and I am ready to.
Selling Wells Fargo
This was actually a December 2020 decision. Why did I do it? Taxes. I didn’t want to pay some short term tax (would have been less than 40bps) so I tried to get cute with a 7% position that has since doubled. Even worse, I did that when I thought sentiment was insanely poor and the business was turning.
Nothing like losing when I am right…
Tax stupidity! I corrected that mistake (I hope) this year by holding some paper losses over 12/31/21. Hope I’m right on the underlying names this time.
As a side, perhaps I should have just bet on the bank ETF and/or bought a higher quality financial like Schwab or Ally. That’s a debate for a different day.
February and March Weed Stock Stupidity
I allocated 2% or so to weed stocks in February and March. Does that really matter? Probably not in the grand scheme of things. But I was underresearched and succame to FOMO. That is inexcusable and I deserve the losses and opportunity cost.
OTOH, it did get me interested in a sector I believe will grow for a VERY long time. When I pitched AB InBev (late 2018; a miss) people asked whether I thought weed would take share of beer and alcohol. In another example of motivated reasoning I said I thought they were complimentary.
Well, I sit here 11 days into being California sober (weed is OK; alcohol is not) and realize how stupid my responses were. Weed is going to take a lot of share of people’s “messed up” time. It’s just a matter of time before the world accepts that fact.
Things I Did Well Last Year
Inactivity - I didn’t do much to the portfolio relative to other years. I think some of that was imposing a $500 penalty if I trade without sending a writeup to @tsoh_investing and @francoolivera. As a side, I just had to pay them for buying a position without a writeup.
I am officially flummoxed by the continuing changes in media. The most interesting assets, to me, are NBCU and ViacomCBS. Where do they end up? Because at the moment they seem totally stranded to me. And no, Peacock isn’t the answer to Comcast’s problems.
My biggest takeaway after a couple years following media (though admittedly less closely than many on Twitter do) is I would have been better off not following media. What a mess.
Notes from a Howard Marks Talk to MOI Global
You make the most money in investments that have undiscovered merits. You lose the most money in investments who’s merits are overstated. When describing the Nifty 50 the ethos was “nothing bad can happen and valuation didn’t matter.” The thesis was buy these and who cares what happens because the earnings will grow into the valuation.
If you’d bought all those companies and held them for 5 years, you would have lost all of your money.
Whenever merits are overestimated, the scene is set for investors to lose a lot of money. It’s happened before and will likely happen again. In times of popularity, investors discover an industry that they hold in high esteem and they act as if every company in that industry will be the next big winner.
What takes over in bubbles is people looking at lottery outcomes, which are defined as low probability but high payout.
Thoughts on insider selling at levels they have not been: One thing you have to ask yourself is “what have stocks done over that period?” The real issue you are trying to hone into is whether insiders are selling proportionately more than they have in the past.