One Year At The Aleph Blog!
It has been one year since I started The Aleph Blog. During that time, we have seen a lot of changes:
- The panic in China in late February 2007.
- The troubles in subprime, home equity, and residential real estate generally. (Commercial real estate is a work in progress.)
- Increased realized volatility in the markets.
- Increased price inflation.
- The accelerated decline in the US Dollar.
- Blowout of private equity lending.
- Trouble as the rating agencies and the financial guarantors.
- Trouble in the money markets from SIVs and ABCP.
- Troubles in the municipal bond markets, mainly from overspeculation, but also from troubles at the guarantors.
- The FOMC shifts from being an inflation fighter to a weak economy and lending fighter.
- I left my previous employer (good guys generally), and have become employed elsewhere (a much better match for my abilities and desires).
- My broad market portfolio has adjusted to changing market conditions, and continues to outperform the S&P 500, as it has for the last 7.5 years.
Pretty amazing, I think. My blog is an expression of my character in the economics/finance/investment world. I have a lot of interests, so my blog is diversified in what I write about. There is almost always someone more experienced than me writing about a given issue. I think of myself as a good number 2 (3? 5? 10?) on many issues. Because of that, my job is to look for the interactions — the second-order effects in other markets that may give us a clue as to future happenings.
If you want to see a sampling of what I felt my best articles have been, you can look here. If you have other nominations for this category, I am all ears.
Why did I start the blog? Rejection from those that I wrote for and worked with. I was frustrated, and needed an outlet for self-expression. Learning from what I wrote at RealMoney, from the first day, I followed the same ethics code, to protect those that I worked for.
What of the future? I plan on some meaty articles on inflation, the PEG ratio, some book reviews, and perhaps a series on long-term investing for children. (In addition to what I mentioned in Post 500.)
Now, I did not expect the level of acceptance that I received in my first year, and so I thank my readers. I have been quoted in a wide number of places that I would not have expected when I started this. I only ask that if you like what I write, please refer my blog to your friends, as it seems best to you.
To all of my readers, here’s to a profitable year number two. Thanks for being with me over the past year. For those that have commented here, a special thank you. To my family and church, thank you. Finally, thanks be to Jesus Christ. Woo-hoo! What a great year! 
February 21st, 20088:21 am at
Congratulations David. You’ve been my favorite level-headed value guy over at RM ever since Arne Alsin left.
February 21st, 20083:47 pm at
My congratulations, too! Life has been busy so I haven’t commented lately, but I have made it a point to read your posts every day.
Looking forward to another year.
(and as a former Alsin turnaround/value subscriber I echo what Rich said, but would include Howard Simon, too)
February 21st, 20086:52 pm at
Thumbs up for making such an effort to share your views and provide a platform for critical thinking.
As Galbraith said once: we have far more people selling derivatives, mutual funds and financial innovations than there is intelligence for the task.
Thanks for filling the gap.
February 21st, 20088:35 pm at
I totally agree w/ Rich & Amccabe! In fact, no need to comment further! GMTA!! Congratulations & continued good luck! Oh yeah — thanks a lot for taking the time to blog & share your knowledge, analysis & experience!
February 22nd, 200812:41 am at
Congratulations on a good year!
I’ve been reading the realmoney.com fundamental vs. technical analysis discussion, including your latest, note with interest. I find myself in some agreement and some disagreement with all parties there. I’ll throw in a few miscellaneous comments on those exchanges follow below.
1) I agree qualitatively with Rev Shark’s views that individuals have an advantage in the ability of smaller portfolios to quickly enter and exit positions, and they have a disadvantage of less access to proprietary research. In practice, the former advantage is probably greater than the latter disadvantage.
2) Your points about implicit restrictions on many professional investors fit with my observations. Another point in that same direction is that most professional investors are not able to zero out their quarterly/yearly profit/loss and start each day with a fresh take. I believe the answers to your two questions about TA are “no” and “no”.
3) I’m planning to check out Hewitt Heiserman’s book.
3) My impression, based on reading Rev Shark’s columns, is that he is not an example of a pure TA-based trader. His discussions must mix in close to 50% of content based on his informal fundamental analysis of the market and particular industries/sectors. He’s a lot different than someone like Gary B. Smith.
4) I’m an individual who picks stocks and trades them somewhat like Bob Marcin (i.e. value based bottom fishing, informed by macro views) rather than Rev Shark or Joshua Hayes (i.e. based on price momentum and trends). I don’t agree with Shark and Hayes that this type of trading is inherently harder (or easier) for an individual. I’m about 30% ahead of the S&P 500 over the past 12 months and my stock picking per se has been quite mediocre. Some authors advise that people should find a trading style that fits their personality. But I believe the more important issue is to only trade based on methods that one understands and has sufficient conviction in. One way to gain conviction is by test. But paper trading is a notoriously poor simulation and trading experimentally with real money could be very expensive. So perhaps the main role of personality relates to what people first try while they are learning? A good followup question about a recommended approach to TA would be “Can one realistically make good use of this approach prior to a lot of real world practice or apprenticeship?”
March 1st, 200811:30 pm at
Good points, and I liked Hewitt’s book. I don’t do it exactly his way, but I incorporate his ideas – EVA and FCF in various ways. For new investors, it is important to choose a trading style that they can live with, whatever that might be. It has to be sized to the likely holding period, and willingness to aim for mean-reversion.