Disclaimer

Do your homework before you invest. I am not a professional. I just enjoy investing. I am often wrong.

Friday, December 30, 2011

Final 2011 Purchase

I think I am going to add a little NOK to close out 2011

That will bring my portfolio entering 2012 to this:

RIMM
GRMN
AFAM
RWC
LUV
BAC
BKS
GM
AMED
NYT
TFM
NOK

Nokia has $60 bn annual revenues, is profitable, trading at about $20bn market cap, and has a good balance sheet. The risk outweighs the reward, and the trade was too good to pass up. Also, it should see a nice bump in early 2012 because of tax loss selling.

I was trying really hard to convince myself to buy NFLX, but I can't justify it because although I think they have a lot of potential I don't know enough about their streaming contracts and obligations ($3.5 billion worth!). But that is a tax loss candidate too so I may pick up a small portion and sell it again in the first couple of weeks of January.

edit: It looks like I have a slightly incorrect notion of tax loss selling, per this article here:

http://www.marketwatch.com/story/exploiting-december-tax-loss-selling-2011-12-01

It's more for small caps than for billion-dollar companies. I'm not going to buy any of the stocks he mentioned because I don't know enough about them, but I'll go back at the end of January to see if they experienced a bump.

Wednesday, December 28, 2011

Research In Motion


I am putting a lot of my eggs into the Research in Motion basket. Here is why:

http://stanleybing.blogs.fortune.cnn.com/2011/10/19/blackberry-work-iphone/. A good post touting the essence of Blackberry’s value.  This blog is excellent by the way.

When you talk about the demand curve, supplying the client’s wishes, there are two ways to look at it:
1. Is it what the client wants?
2. In the long run, does it help the client?

Right now, number one is squarely on the Android and iPhone’s side of the court. Those guys have all the hype, at least in the U.S.  The advantages of the Android and iPhone are the ease of use, the app world, internet browsing, and the social perception of owning the devices.

Number two, more up for grabs in my opinion. RIMM has the secure servers, wireless sync of contacts, mail and calendar with Blackberry Enterprise, the keypad for more accurate typing, ability to edit MS Office, better phone call signal.  Here’s a youtube review to support my point:

I am not going to try to analyze the technology because that is not my forte. But I think a few things argue for RIMM’s value at its current trading range around $15:
1.     Many core U.S. subscribers will not switch
2.     Strong international growth
3.     High margin for error, with price at only a couple times trailing Cash Flow

Here you go

1.     Core subscribers:

Once a customer has used a phone for years, there are switching costs to learning a new phone’s interface. The reality is that there are many corporate guys who have been using Blackberries for 10 years are not going to want to switch over to the iPhone. The first time “Let’s have a meeting in 10 minutes” is changed to “Let’s have a merang in 19 mimosa,” they are going express dissatisfaction.

2.     Strong international growth:

Here is a news report of Indonesian customers rioting over a shortage of Blackberries in a black Friday deal.

Blackberry Messenger and prepaid service are very popular overseas. International sales were 61% of Blackberry’s revenue in the most recent quarter, and growing. The international Blackberry business alone is worth more than RIMM’s $8 billion market cap.

3.     High margin for error

You don’t need Blackberry to grow to make money on an investment. In fact, if the RIMM can maintain its 2012 results for three years, the investment will be a resounding success. Considering the international growth of the company, I think that is achievable.

Let’s break down RIMM’s income statement from the first nine months of Fiscal year 2012 (through November 2011):
Revenue $14 billion
COGS $9 billion
Gross Margin: $5 billion (36%)
R&D $1 billion
SG&A $2 billion
Amortization $0.5 billion
Net Income: $1.5 billion

Proj. FY2012 Net income: $2 billion

That includes the PlayBook $500 million inventory charge. So margins are sitting pretty at 36%, not likely to go down a lot unless RIMM dramatically lowers its phone prices. Amortization will rise in the coming years. But there’s no reason to think there will be a huge decrease in revenue or increase in COGS (remember that RIMM is still selling a lot of phones at the $300 level; although hardware sales are flat they are not tanking. Plus subscriptions fees are approaching $4 billion per year, and those are higher margin, and are not going to decrease because the number of Blackberry subscribers is increasing).  Income statement looks good.

Now the balance sheet:
Cash $1 billion
Other current assets and investments $1 billion
Receivables $4 billion
Inventory $1 billion
PPE $2.5 billion
Intangible assets $2.5 billion*

Liabilities $3.8 billion

*Includes patents valued by analysts around $5 billion, but held at cost on the balance sheet

Equity $10 billion

That is a very strong balance sheet for a company with an $8 billion market cap.  I like to organize the items as above, and evaluate their certainty so to speak, with cash always certain and the rest evaluated on a case-by-case basis. Inventory, we know, should be realistically priced after that enormous Playbook charge. Accounts receivable is the only red flag - $4 billion is pretty large. Here is what I found in RIMM’s annual report about this:

At the end of fiscal 2011, accounts receivable was approximately $4.0 billion, an increase of $1.4 billion from the end of fiscal 2010. The increase is primarily due to increased revenues and the increasing international mix of business where payment terms tend to be longer as well as the timing of shipments in the quarter. Days sales outstanding increased to 65 days in the fourth quarter of fiscal 2011 from 58 days at the end of fiscal 2010.

Credit and Customer Concentration
The Company has historically been dependent on an increasing number of significant telecommunication carriers and distribution partners and on larger more complex contracts with respect to sales of the majority of its products and services. The Company continues to experience significant sales growth, resulting in the growth in its carrier customer base in terms of numbers, sales and account receivables volumes, and in some instances, new or significantly increased credit limits. The Company, in the normal course of business, monitors the financial condition of its customers and reviews the credit history of each new customer. The Company establishes an allowance for doubtful accounts that corresponds to the specific credit risk of its customers, historical trends, and economic circumstances. The allowance as at February 26, 2011 is $2 million (February 27, 2010 —$2 million). The Company also places insurance coverage for a portion of its accounts receivable balances. While the Company sells to a variety of customers, one customer comprised 15% of accounts receivable as at February 26, 2011 (February 27, 2010 —one customer comprised 14%). Additionally, two customers comprised 11% each of the Company’s fiscal 2011 revenue (fiscal 2010 revenue — three customers comprised 20%, 13% and 10%).


So it looks like their receivables are from large telecom companies. The international companies are receiving Blackberry phone shipments, and perhaps not paying for them until they sell them? As an investor, to be honest, I wish RIMM would go in there and bust some kneecaps and get some money faster. But RIMM claims the money is good. In any case, this is a minor concern compared to the big picture.

What is the big picture? Look at the margin of error. So many things have to go wrong for RIMM to end up selling itself for less than $8 billion dollars. Receivables have to vanish, profit margins have to disappear, and subscribers have to stop paying monthly fees. It’s an improbable scenario. 

I think the market is suffering from some recency bias here – investors saw the Palm result and are freaking out, but RIMM is a different company than Palm was. Also, Palm still commanded $1.2 billion from HP even in its decline. Palm was hovering just above a billion in revenue and was losing money.  Blackberry is sitting on $20 billion in revenue, and is profitable. Blackberry’s $7 billion market cap is below the bottom of the barrel.

At 75 million subscibers, RIMM is trading at about $100 per subscriber right now.  I have been unable to get my hands on decently comparable statistics, in part because only Apple and RIMM combine the smartphones with the OS. But common sense tells you that is low.



A quick note on:
Tablets – You see the three tablets that are selling well: Kindle and Nook (sold at or below cost), and Apple (social value – owning a device with the big Apple on it is a trend now). Like the RIMM CEOs said in their latest conference call, the tablet market is still in its infancy, and there is a lot to play out. 

Apps – Apps are important.  Blackberry has to step it up in this department. But I think they can do it with incentives for developers.

Service Outage – A one-time blip will be forgotten. Let’s hope it doesn’t happen repeatedly, but I think that’s unlikely.

A good exercise is to look at the investment of the guys on the other side of your trade. The investment thesis goes like this:
Blackberry has no advantage over the iPhone and Android market. The phones are behind technology-wise, and the user experience is not as good. There are fewer apps. So the phone is pretty much a dead fish in the water. Sure they are more secure, but that’s not going to save them. The company will have to choke down on margins and will not make any profits starting in mid-2012. We should put “0s” in our model for all future profits, and value the company at the present value of all of its assets, no higher.

I don’t see it. Sure, the delay of the new operating system is a bump in the road. But there will still be a market for Blackberries in two years. Gross margins are not going from 38% to zero year over year.

Part of why RIMM is suffering is it got burned by share buybacks in the last two years. So the company is not going to buy back shares today, although that would be the right move in this case.  That has caused shares to plummet, with no floor in the immediate future.

I think the Bold is a nice phone. RIMM is seeing strong international demand. I believe some of the weak U.S. demand is because of the sort of social coolness factor of owning an all-touchscreen phone right now.  But in the long run, trends change. BBM is popular overseas, especially among teens.

The part I like most about this trade is that most people seem convinced that RIMM is going to fail. Message board posters, bloggers, and analysts are talking about no future profits, the potential for bankruptcy, etc.  Writers who were playing the value card at $25 are now so tired of looking bad that they just flip their positions.  People who were short the whole time are convinced that they were right and push harder with their reasoning.

Investing in RIMM could be viewed as a prop bet: Can the company maintain profitability for three years? If it can, then RIMM is probably a good investment based on its balance sheet. I think the odds are greater than 50% on yes.

Disclosure: I own RIMM shares.

Monday, December 26, 2011

Bubble Paranoia?

It's cheap easy to make a lot of nondescript posts without making any real predictions. But I'm going to do it one more time before I really start throwing names out there of stocks I like.

The value trend is very hot right now - seems that everyone is so scared of a bubble, a lot of money is cruising into the low-P/E stocks without really thinking about it.

But there are a couple of opportunities available in the growth sphere that I am going to take another look at over the next few weeks:

1. Pandora (P) trading at $1.6 billion market cap. Revenues are growing at about 100% per year, and are sitting at $400 million now. As a growth company, if you can get a safe P/E around 15 without killing your balance sheet, it's a pretty good investment. The question is when does Pandora's revenue growth stop, and what could their long-term profit margin be?

2. Netflix (NFLX) similar company, but in the streaming movie branch instead of music.  $3.8 billion market cap. Currently trading at about 20x Earnings, although the company has warned that 2012 will not be profitable. Revenues around $3 billion right now.

Both companies have to negotiate rights with content providers (record labels or movie studios). Their bargaining power with these content providers will have a huge impact on long-term income. Right now the content providers are sort of playing hard ball, but in the long run, I think the network effects of having so many subscribers will force the content providers to offer their content at reasonable rates.  Throwing a completely arbitrary and baseless number out there, let's say these companies have a profit margin potential of 5-10%. That means we've got to get Pandora's revenues up to $2 billion and Netflix's about to $4.5 billion to make this a good investment.

Both numbers seem easily attainable, Netflix moreso. Netflix carries huge internet capacity concerns, since streaming movies really increases internet traffic, but in my opinion the demand curve for Netflix is inelastic and can sustain many price increases, even though some customers want to complain when they raise prices.

So off the top I like these investments. I want to try to read some 10-Ks and Qs so I really know what I'm getting into before I decide whether to invest. Fun stuff!

Side note: Here are a couple articles about a trick that IPO companies sometimes run to limit supply and keep share prices high. LNKD still has a limited number of shares on the market, but Pandora has released all of its shares I believe.

http://seekingalpha.com/article/308825-end-of-linkedin-s-lock-up-period-does-not-bode-well-for-investors

http://www.forbes.com/sites/ericsavitz/2011/12/09/pandora-brace-for-the-lock-up-expiration-monday/


Disclosure: I don't own these stocks. I might buy Netflix soon.

Friday, December 23, 2011

Variability is not the same as risk

Here are three things that the market sometimes overlooks.

1. Variability is not the same as risk.
  Analysts use historical Beta to come up with a cost of equity for a company. Beta is determined by taking the stock's variance in relation to the market by some squares formula. Fun stuff. It's more elegant than it is useful in my opinion. First of all more than just correlation or variance is important, because correlation of correlation and variance of variance affects things, but these are not included in typical formulas, Re = Rf + B(Rm - Rf). Rf is the risk-free rate (U.S. t-bills although they're really not risk-free), Rm is the historical market return, B is the correlation between the stock's return and the overall market. But that's a side story.

The real issue here is that past variability does not predict future variability; in other words, variance is not the same as risk. Cost of equity is attempting to determine the uncertainty of a company's future income. The idea that the past correlation of the company's stock with the market is predictive of the company's future income. That is not true. Let's be practical and look at it with a couple of examples: Let's say a company had a news story come out that it was being investigated by the SEC. The stock price plummets. Then it comes out the next week that the story was bogus. The price rises. Now you have a company with higher Beta, and according to the market a higher discount rate. But the certainty of the company's future cash flow has not changed in the slightest. 

Now a real-world example: Rambus (RMBS) was hinging a lot of future profits on the outcome of a lawsuit against Micron. Using historical Beta, you might discount Rambus's future income projections at around 15-20%. But just looking at it practically, they should have been discounted based on the probability that Rambus would win the suit. Maybe a 30-50% discount rate. Rambus stock plummeted when some negative news about the suit came out, an analyst suspended coverage, etc. The same is true for USEC, Inc. (USU), dependent on a loan from the Department of Energy to create a nuclear power plant. Future income should have been discounted heavily (much higher than WACC based on the historical Beta) because of the higher risk of USU not receiving the loan guarantee.

Let's try to come up with a formula to determine what your discount rate should actually be:
Simple model:
A 50% return, coin flip scenario

Bet $1 today to win $2 tomorrow.
Winnings*P(Winning)/(1+Rf)
1/(1+Rf) is what you should pay for the bet. Not quite done. Now consider the impact of this bet on the rest of your finances. Since it's small, it won't matter. But let's say it's a billion dollar bet and you are a company. In the event that you win, your cost of debt and equity will decrease. But if you lose, your cost of debt and equity will rise, and it will rise more than it would decrease if you won. Because of diminishing returns. So we have to measure how the event of loss would change an individual's or company's discount rate in order to determine the true cost of equity in a project. In other words - ding ding ding - a cost of equity is not just project specific, it depends on both the investor and the project. That's why the historical Beta model doesn't work.
Winnings*P(Winning)/(1+Rf) - Assets*(increase in WACC)*P(losing) + Assets*(decrease in WACC)*P(winning)
or something like that

Now, let's say you've got the same scenario, but there is 5% risk that the person you are betting against will be insolvent.
$2*.5*.95

Actually I'm getting tired and this is complicated; we'll come back to this later.



2. Markets are not perfectly efficient.

Duh. But so many people believe they are. Some people are better at picking stocks than the market because they have more information. Others are able to interpret information better. Others interpret information worse. Just look at all these Chinese ADRs being exposed as scams. The short selling firms who gather the information, of course they are going to beat the market because they have more relevant information and they are able to act on it. Like Muddy Waters.

Markets are subject to bias - recency bias, bias against illiquidity, and many more. You've got to find the bias and exploit it. It's hard. Markets are mostly right. But there's room for improvement.


3. A company with a strong balance sheet should have higher P/E than a company with a ton of debt.

What is the formula? Something like
WACC = Re (E/V) + Rd (D/V) (1-T)

Who cares? It's wrong. It's wrong because analysts use Beta to find Re, but actually Re is influenced by the amount of debt a company takes out. If a company with a B = 1.5 and a clean balance sheet with assets of $1 billion tomorrow takes out a $1 billion loan, the cost of equity should go through the roof. But using the formula listed Beta and Re would not change.




What risks are investors trying to avoid when investing in a stock or bond?
1. On one end of the spectrum, the risk of default, or nonpayment
2. On the other end, the risk of inflation that renders returns valueless



Disclosure: I don't own any of these guys mentioned here. Won't take out any positions in the next 72 hours. Why do I have to say this here?

Vendor Specific Objective Evidence

Ok, this has taken me a little further down the rabbit hole than I intended.

VSOE is a revenue recognition standard imposed by GAAP on U.S. public companies. It applies to companies who sell a package of goods and services, such as software that will require future updates, or a device with a warranty attached. Even if the company collects an up-front fee for the item, it cannot book that fee all to revenue on the income statement because GAAP considers that the company still has obligations to its customer, so it would be misleading to book all that revenue with consideration still to be delivered. An example is with Garmin, it sells GPS devices with lifetime updates, even though it takes payment up front, it has to defer revenues because it still has the obligation to update the maps over the life of the product. Three things can happen that cause stocks to be over or undervalued in the market:

1. The company might under-recognize its revenue and income and be ultra conservative to make sure it complies with VSOE standards. This would cause a stock to be underpriced. I believe this may be the case with Garmin, GRMN, and many other companies. Better to be safe now than have to restate income later.

2. The company might be forced to restate income because of a small mistake. The stock would probably plummet. Sometimes it's a big deal when restatements are made; other times it was an honest mistake and the restatement is trivial. But the market often doesn't care. The word "restatement" causes many hedge funds and mutual fund managers to flee the scene. This could cause shares to be undervalued. See this article for examples: http://www.cfo.com/article.cfm/10328463

3. The company might not comply with VSOE and state all of its revenues up front. This would come with a chance of being forced to restate earnings if an internal auditor changes. These companies might be prime for a short.

Seems simple enough right? Let's start making profits! Whoa there, hold your horses. This thing is super complicated. It involves normal probability curves and price lists and all sorts of tricks and treats. The GAAP has been trying to change it for three years and can't come up with an adequate solution. Now they have a Best Estimated Selling Price, and another current proposal is in the comment stage, and may be rolled out mid-2012. Eventually I want to put together a little VSOE portfolio of overvalued and undervalued stocks. But that will require a lot of time. Since I'm still trying to get a general grasp of the markets, I am going to put off that task until later. I will eventually get to it though. One thing I will do for now is check out a list of small-cap software companies and put in a call to their CFO to ask him/her how VSOE affects his income statements. I'll probably get blown off by most of them but maybe a few can offer some practical information.

Disclosure: I am long GRMN.

Monday, December 19, 2011

What we are trying to do

In 2008, there was a rule change in professional football: Coaches whose team won the opening coin toss could defer receiving the ball until the second half, instead of being forced to take the ball first. There were two ways of thinking on this scenario: most coaches, including the Colts' Tony Dungy, continued to take the ball first. A few coaches, such as the Jaguars' Jack Del Rio, opted to defer to the second half when they won the toss. This meant that when a coach in the Dungy camp played a coach in the Del Rio camp, you could predict fairly accurately who would get the ball first. However, some bettors and NFL prop betting sites had not accounted for the change, so there was a potential for some arbitrage on the bet "Which team will score first?" When the Jaguars played the Colts, a bettor could get much better odds on the Colts scoring first than he/she should have been able to, because the market did not realize that the Colts were certain to start with the ball. The astute bettor had an advantage. Let's call that arbitrage, positive expected value, or odds skewed in your favor.

Another example of the skewed odds: Some sportsbooks will take a 50/50 bet as to whether the total score will be even or odd. Seems fairly innocent, right? Let's look at the numbers. The most common football scoring margins are related to the ways a team can score: 1 pt, 3 pts (Field Goal), 4 points (TD over a field goal), 7 points (TD), 10 points (TD plus field goal), 14 points (2 TDs). If the difference between the scores is odd, the total score will be odd, and vice versa. You can see that in close games, the total is more likely to be odd, and in blowouts, the total is more likely to be even. When the line on the game is more than 12, you can take even on the total and in the long run make a very slight profit.

I don't bet on sports, but those are good examples to use because they have fixed odds with all-or-nothing type returns on investment. The problem with betting is the credit worthiness of the person/company that is backing the bet. It's illegal, and there's a chance that if you win they won't pay up. The point is, there are market inefficiencies in stocks just like in the football betting examples above. You have to find them and exploit them. These inefficiencies are often based on market bias or rule intricacies. The next post will examine a GAAP rule that might create a chance for stock market profits.

Saturday, December 17, 2011

There are no pictures on this blog

That's ok. Pictures do not create investment profits.

The Red Queen and Business


Matt Ridley’s The Red Queen: Sex and the Evolution of Human Nature:

The book is named for Lewis Carroll’s character the Red Queen, who said in Through the Looking Glass, “It takes all the running you can do, to keep in the same place.”

What the author is implying is that there is no sustainable competitive advantage. Any advantage over a length of time is short-lived as other species and genes work hard to catch up.   The reason is that instead of being an evolutionarily dynamic machine, nature is actually an organ of stasis.  Everything tends to remain the same unless it is necessary to evolve; or as the second law of thermodynamics puts it, in a closed system everything tends toward chaos.  An anecdote on p. 331 demonstrates the point:

“… Henry Ford once asked his representatives to find out which parts of the Model-T never went wrong. They came back with the answer that the kingpin had never gone wrong; so Ford ordered it made to an inferior specification to save money. ‘Nature,’ wrote Humphrey, ‘is surely at least as careful an economist as Henry Ford.’”

But there are forces that cause change, and that is what we are interested in. Change is based on survival. There are four main themes, facets of survival, detailed in the book:  The ability to acquire valuable resources (to hunt, gather food, etc.), the ability to avoid being eaten, the ability to ward off parasites and diseases, and in sexual species the ability to acquire a mate.  The first three are inter-species relationships; relationships between an animal and the outside world. Sexual selection is an intra-species battle, and is dependent on an animal’s perception of the first three facets of survival in his potential mates.  Each type of relationship has a parallel in the business world.

The inter-species relationships, or “the value proposition.”
The ability to acquire resources and avoid being eaten is essentially the relationship between an animal and his predators and prey. Animals can use strength, speed, discernment, cunning, poison, camouflage, etc. to find food and avoid predators. In addition, animals use biological evolution to prevent parasites and disease. Genes evolve with defense mechanisms to help the body rid itself of viruses, and viruses in turn evolve unique techniques for attacking the body. An animal’s chance of survival depends on all of the survival techniques listed: It is no good if an animal can avoid disease, not be eaten, but cannot find food for himself. Likewise, failure of either of the other two techniques will result in death. Those can be compared to the value that a business creates for potential customers. If a business can differentiate itself from its competitors through cost or quality or convenience (avoid being eaten), have positive profit margins on its sales (find and acquire resources), and avoid theft and errors and unnecessary overhead and turnover (viruses and parasites), it has value.


The intra-species relationships: Sex, or “the customer’s perception of your value.”
Sex is all about marketing. An animal has to market his reproductive value to potential mates. Then the potential mates will choose him as a partner.  The animal has to market his value proposition, or his unique ability to survive and outcompete other species.  But ultimately, mating or lack thereof is what kills genes, multiplies others, and causes evolution.  Think about it: In order to survive, an animal only has to be the least weak. For example, in a species of gazelles, only the slowest gazelle in a pack is eaten by lions. The second slowest survives.  But the second slowest gazelle is not likely to have a plethora of mating opportunities, because speed is an attractive quality to gazelles.

The business parallel to the mating game is marketing and customer relationships. The most valuable product on the market is nearly worthless if no customers will buy it.  So marketing and customer relationships are the drivers of innovation and value.  Ultimately, the demand curve is the market driver, and the supply curve reacts.

The goal of marketing is to lower the customer’s cost of determining the best product. If it will take hours of research to decide which is the best toothpaste, the customer will not bother.  So companies market products in efforts to make it easy for the customer to determine the most valuable products. “Honest genes” emerge, and copycat honest genes follow, and so on. 

Honest genes, as described by the author, are genes that demonstrate to potential mates an animal’s ability to survive. For example, symmetrical patterns on a peacock’s tail can show a healthy upbringing, a lack of parasites, and an ability to find food.  An unhealthy peacock would not be able to grow a beautiful tail. A business can have an “honest gene” marketing campaign: for example, our toothpaste manufacturer might promise whiter teeth or your money back. That is an attempt to make the decision cheaper and easier for the consumer. But just when one honest gene emerges, the market will often spawn a copycat. Rival toothpaste companies might make the same claim, but unknown to the customer, might make cheap toothpaste and renege on their commitment to refunds. Now the quality toothpaste is again buried in the market, the customer is not sure which toothpaste to buy, even though the former brand is clearly the more valuable. That is why consumer perception is so important.  It is  the gene selector, or the decider of a business’s survival.

Since there is no eternally sustainable competitive advantage, the question we want to ask before investing in a company is what is the way to achieve the longest competitive advantage possible? And how can you see a competitive advantage emerging before it happens?  Or an even more pertinent question, how can one predict a company’s competitive advantage and its profits better than the market predicts it?

Sources of competitive advantage, or ways a company can make money: Offer the same product as competitors but for a lower price; offer a unique and valuable product different from competitors; offer the customer a more convenient way to acquire a product; eliminate risk of security, safety, product defects, or poor delivery for the customer in acquiring your product; earn money from a government contract; or rip the customer off.  I believe that all corporate profits fall under one of those six categories.  Compete on price, compete on quality, compete on convenience, compete on security, receive a government contract, or convince the customer that you lead in one of these categories even when you do not.

Wednesday, November 30, 2011

Reading reviews

The first think to do is read.

I will post reviews of books starting in a couple of weeks.

I imagine it's important that the first book be an unusual one. You have to have original ideas. If you read the same thing as everyone else, you will be stuck in the same mindset as everyone else.

Many popular investing books have very good information, but perhaps the ideas have permeated the market.  They are good to read in the long haul, but the first read has to be unique.

I will start with The Red Queen: Sex and the Evolution of Human Nature. There are many business lessons imbedded in that book.  That will help me get a fresh look at investing.

Hello world

This is a business and investing blog.

I want to get good at investing.

I figure it will take a few years of trial-and-error to become consistently successful.

This will chronicle the journey. Hold on to your seats. Woo woo.