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Does it make sense to post semi-annual results???

June 27, 2012 | About:
whopper investments

whopper investments

50 followers
So here’s a fun question I’ve been thinking about for a while, and I figured I’d go ahead and open the “thought process” to readers for discussion and comments.

The question is: with the first half of the year coming to a close, does it make sense for me to publish my semi-annual results on the blog?

Some background: readers are constantly asking me, in both the comments and through emails, about what my track record looks like. Many of them have said something like this,

I like your articles, and you sound sharp… but could you provide me with your track record. I want to make sure you’re a “money maker” before I start listening to you.
Now, that’s obviously not an actual quote. But I’ve received multiple emails that are very close in both sentiment and wording to that one.

And I have made several changes to my investment process that make tracking and bench-marking results much easier. Mainly, in the past I have added funds to my investment account whenever I had excess cash and felt like adding money. This year, I’ve completely stopped adding funds and wrote down the value of my accounts at the beginning of the year. Thus, any increase or decrease in my account can’t be attributed to “market timing” when investing funds and can only be attributed to my stocks’ performance.

Plus, there are several upsides to posting performance. In a dream scenario, I’ve heard of several people who got funded simply by posting their investment records and thesis online. In a more realistic scenario, posting performance allows me to go back and check my results in the past and prevents me from the “cognitive” bias of making myself believe that my past returns were better than they were, as well allowing for identification of specific reason why I under or outperform each year.

However, there are some downsides too. Re-read that quote I posted.

It seems very, very strange to me that readers would need to know my investing record when considering the quality of my ideas. While the two are undoubtedly related, they aren’t necessarily completely correlated. Maybe 90% of the stocks I’ve invested in have done well, but I’ve had trouble sizing positions and thus have performed poorly. Or maybe my picks have worked out well, but I can’t handle volatility and consistently sell on dips and panics (it’s actually probably the opposite- I’m way too eager to buy on dips).

Of course, if you were turning money over to me to manage, then you would certainly want to see my track record.

But there’s a big difference- the blog is only a discussion point and a way to share potential investments with readers interested in value investing. Given that the blog is free and simply intended as a way to provide you with ideas, what does track record matter? You’re the one who ultimately decides whether or not to make an investment, and the responsibility for performing due diligence and position sizing ultimately rests on you, not me. For a blog, shouldn’t simple soundness of reasoning and interesting ideas be enough?

Another secondary consideration- I already post my investment thesis on just about every stock that I invest in (there are currently three or four positions in my portfolio that I have not posted on, and all of them have posts pending- just waiting to acquire more shares), as well as a post-mortem when I sell and frequent updates while holding, plus my top five holdings every six months or so. It’s really not too hard to keep track of how my picks are doing- and wouldn’t a quick review of historical picks be more trust worthy than unverified numbers that I simply throw out? Would you really be more likely to listen to me if I posted every six months claiming to be up 20 or 25%?

Speaking of performance concerns- my performance can swing very wildly based simply on the bid-ask spread in the micro-cap stocks I invest in. Literally $100 worth of trading at the bid or ask could be the difference between a couple of my stocks being up 15% for the year or down 10%. That can have a pretty big effect on performance…..

One last personal concern is that I may become more “short term” oriented. Yes, it seems silly to become short term oriented simply because I’m publishing results that have no effect on anyone but me, but I’m quite competitive and don’t really want to post an “embarrassing number.”

Of course, maybe that’s a good thing- maybe it’ll force me to focus more on identifying interesting catalysts or performing more due diligence!

So, with all that said, I’m going to start publishing semi-annual results. But I’d love to know if it really matters to you, the reader. Do you even care one way or the other? Are you more likely to read the blog if i told you I was up 500% year to date, or less likely to read it if I said I was down 70%?


Rating: 2.8/5 (6 votes)

Comments

tonyg34
Tonyg34 - 2 years ago
I don't know if it matters when you check up on your performance but I certainly would argue that it is helpful once a year or so to see how your performance stacks up. If you consistently underperform your goals (whatever that % is, not necessarily the russel 2k) then its becomes a problem of opportunity cost. But I've read your blog and think you already do a good job of self-criticism and reviewing your investments to ensure that you still have valid reasons for each position. Welcome to the world of money mgmt, your returns really are what matter most to clients. To readers? I'm not so sure. As conformation that your work adds value I think it will be helpful for you to publish results, but you won't be able to accomplish that goal until you have at least 3 yrs of data, specifically b/c micro-caps and net-nets often take so long to realize a catalyst.
batbeer2
Batbeer2 premium member - 2 years ago
>> But I’d love to know if it really matters to you, the reader. Do you even care one way or the other?

All possibel answers are by definition correct. It's the assumption within the question that is wrong.

There is no such thing as "you, the reader". Unless your audience is relatively small ;-)

Some will care and some will not. Others will even avoid reading your stuff if you publish your record. Your choice; what type of reader do you want to appeal to?

I think if you are going for a large audience (that makes sense) you are almost guaranteed to alienate a small but important group.

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