The 2023 Game Plan
Short thoughts on where this newsletter is going & The Battle for Investment Survival
Apologies for the infrequent posts the last few weeks - work has been busy so that has kept me preoccupied. But now that I have a little more free time, I will be putting more pen to paper and try to post more often.
I’ve been thinking about how I want to structure this Substack. Most of my readers probably also follow my other newsletter (The Rational Cloning), which is just a weekly compilation of various interesting ideas from different fund managers, FinTwit, Substacks, investing blogs, etc.
However, given that it is just a compilation, it’s been quite difficult to inject any of my personal ideas and voice into the issues. Moving forward, I think I will be using this newsletter as a way to share my views / perspectives on different ideas (similar to Joachim Klement over at Klement on Investing and Andrew Walker at Yet Another Value Blog).
It is not meant to persuade anybody of anything - it will be simply be a ledger of my observations, how I am currently perceiving the world and whatever I am learning about. Of course, I will still be using this as a research archive for those who still wish to peruse the collection of research and investment ideas.
The ultimate goal for my readers is that they walk away from each issue with some idea that made them go… hmm 🤔
Happy learning and, as always, happy cloning.
I’ve been re-reading Gerald Loeb’s The Battle for Investment Survival (free PDF here), which was originally published in 1935 but it’s strangely eerie to see how so many ideas still ring true today:
Successful investment is a battle for financial survival.
The most important thing I have learned over the last 40 years in Wall Street is to realize how little everyone knows and how little I know.
Nothing is more difficult, I truly believe, than consistently and fairly profiting in Wall Street. I know of nothing harder to learn. Schools and textbooks supply only a good theoretical background.
But remember, life is a succession of cycles. Day and night. Hot and cold. Good times and bad. High prices and low. Dividends increased and dividends cut. So don’t expect your investments to be the exception to the rule.
To make money in the stock market you either have to be ahead of the crowd or very sure they are going in the same direction for some time to come.
Cutting losses is the one and only rule of the market that can be taught with the assurance that it is always the correct thing to do.
You don’t need analysts in a bull market, and you don’t want them in a bear market.
The engineering student attends a school and is taught certain rules regarding stresses and strains. In later life these rules always apply. There is no such thing as a final answer to security values. A dozen experts will arrive at 12 different conclusions.
Diversification is a necessity for the beginner. On the other hand, the really great fortunes were made by concentration.
The main takeaway is that investing is hard. It’s multiple battlefields and minefields all mixed into one out there. Everywhere you look, there are companies in terminal decline, management pumping their stock while dumping it, investment banks promoting unprofitable IPOs, governments cracking down on whole sectors, outright fraud, etc. The list is endless.
Without the proper mindset, strategies, analytical abilities, and healthy doses of luck, you’ll get blown out of the water. Even with everything seemingly in place, investing is a tough, tough game to be consistently and fairly profiting in.
Tough, but not impossible.
I’ll end this post with a Jesse Livermore quote I often think about (from How to Trade in Stocks):
"The stock market is the world's biggest gold mine, a gold mine that opens its doors every day and invites anyone and everyone in to plumb its depths and leave with wheelbarrows full of gold bars, if they can!"
But he cautioned, "when the bell rings at the end of the day they have gone from pauper to prince... or gone stony broke."
Something I have been reading/thinking a lot about again are multi-baggers, so keep an eye out for that piece.
Looking forward to more of your reflections🙏