I had what can only think of as a peculiar question left on the blog yesterday, that then ensued into an interesting comment exchange, that I will try to answer in this post. You can read the entire question here but basically I am being asked if my blogging and teaching (if that is the best word?) works against my interests as a money manager. "We just think that you are inadvertently cutting off the (tree) branch of your perch" is how the question ends.
Long time reader George left a supportive comment saying this person may not get it and I think that is probably true.
According to my Sitemeter, which is public, I average in the neighborhood of 1250 hits per day. Actually on days the market is open it is closer to 1500 and goes way down on the weekends. Add to that the number of people that read my content through various feeds and aggregators that don't even come to the site. Add to that however many people read my stuff on Seeking Alpha/Yahoo Finance. Lastly add the people that read the articles I write for RealMoney and TheStreet.com. While I don't know, it is possible I reach 5000 people a day.
I am aware of three people in Prescott that read my blog. Three. Regardless of how many people actually to read my stuff I doubt that even 5% (I would be shocked if the number were even 1%) of people that that do read me are from Arizona, where that vast majority of our clients live.
Based on these numbers I don't think cannibalizing prospective clients is really an issue to be worried about.
The comment includes something I don't quite understand about my use of the term do-it-yourselfer. I think the blogosphere caters more to people that will never hire an investment manager, not exclusively but generally. These folks, whether they should or not, will manage their own portfolios.
There are many reasons why I have the blog and why I put so much into it. First and foremost I enjoy doing it, simple as that. Another reason is I learn from readers and I also hear about new products from readers too which helps me be better at my job. It has opened many doors to me in terms of other writing opportunities and making contact with much bigger fish that I would have never otherwise met.
Almost as important as enjoying writing the blog is that I get tremendous satisfaction helping people become more knowledgeable investors. I doubt the commenter can really grasp the extent of my sentiment here.
One last thing about this exercise was a tone that I think I picked up on in the question where I owed the commenter an answer. Answering reader questions is productive and I enjoy it but I don't owe this person anything, let's be clear about that. Equally off putting was that the comment in question was also left on Seeking Alpha.
For something that actually makes this post worthwhile and relevant; Alcoa (AA) reported earnings last night and for the 175th quarter in a row (hyperbole) they missed earnings and the stock went down. In all seriousness they miss earnings a lot, I wrote two different Motley Fool articles about Alcoa earnings misses (here and here). A thing I have touched on many times is knowing what the stocks you own are capable of doing and continual earnings misses should be included in this understanding.
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30 comments:
I am very glad you enjoy writting your Blog. I think it will help your business and your thinking in the long run. Many posters providing occasional nuggets of information can not hurt.
But the biggest benefactors are also some of your greatest critics (kind of screwy isn't it).
I think your blog is great. I am a daytrader/voly ff/ski-bum and have no problems balancing work/fun work/and sporto-passion. Keep up the excellent posts.
It's like telling someone a joke - if they don't understand the punch line the first time, no amount of explanation helps.
Keep up the good work.
OG
Roger,
Your blog is in my top 5 readings everyday. This person has no idea how much you help us understand the markets. Some people just don't get it.
mh
Hi Roger,
I'm a 27 year old do-it-yourselfer and I read your blog daily (through my RSS reader). I've been meaning to say thanks for a long time and this seems like a good time to do so.
I really enjoy managing my own portfolio, and for the time being, while I have no wife or children, I find that I have sufficient time to do so. I hope to step back someday from managing my own money, and when I do, I figure that my personal experience will make it that much easier for me to effectively communicate my desires, tolerance for risk, etc, with my money manager.
Before I'd begun reading your blog I had primarily educated myself through books written for the do-it-yourselfer and had a negative perception of having someone else manage my money. Seeing the amount of energy you put into managing your clients money makes me feel much more comfortable about the idea of someday handing over the responsibility of managing my money to someone else.
Thanks a lot, like so many others, I really get a lot out of your posts.
-Andrew
If you are referring to post by C-----, it is most probably a spam to attract attention to their service.
Cutting off the branch
______
My idea - Quite the opposite
. . . the BEST advert for competent management.
[ that 'Branch' stuff - someone who thinks like Bob Pissani?]
______
I agree it is probably a spam. Their first post actually links back to their own little blog. They caught their mistake and linked back to their company site on the second post.
But lets turn the tables a little. At their blog they have a post about the world shortage of potable water. It offers zero (and I mean zero) information beyond what they probably cribbed from a United Nations web site, and then proceed to recommend some ETFs that would make good plays in this area.
If they had 5000 readers (or 1000 readers) they might actually have somebody (a do-it-yourselfer?) who actually was in the industry and might actually have something to add to the equation. I have seen some finance types give brilliant prognostications on their view of future wealth only to see industry types absolutely (politely-most of the time) destroy their argument. It is not that the finance types don't have good arguments, but you cannot be an expert in everything.
russell
Your work needs encouragement, not censure. Finding quality commentators on financial investing is difficult enough, certainly even more difficult to find commentators without third party interests that may 'cloud' their judgement. This site provides a valuable perspective on ways to think about the various elements of a financial investing universe. For one, you have provided me with a perspective of how one professional money manager reflects on those various elements. I find that incredibly useful. It provides a balance for me from the mindsets of two extremes; either 'do it yourself' or 'leave it to the professionals' as the only choices.
Early on in my career as a money manager I was told to keep a journal of my work thoughts. Basically that's what you are doing in a much more formal venue. The benefit is that it forces you to think through opinions and issues and formalized ideas you might otherwise put off. You must formalize them and put them in writting or your ability to correct for mistakes will leave you thinking you've never errored.
I don't agree with a lot of what you write but I respect that you write it and like to read how you formed the opinion.
Roger can I have your gig? It's a sweet one. Doing something that gets your juices flowing. Nut'n betta. I do buy into your apparent belief that you are part of something new and big. Did you put those puppies up to that ridic post to get all this support? Cool. I actually would consider Roger to handle my account. He loves his job,for starts. And, if I was responsible for seeing that the ETF industry thrives, I would indeed hire Roger to write this blog and tell him no strings attached.
Can you comment a little how important technical analysis is in your work?
Roger,
Awhile back, maybe 20 years ago, John Templeton came with his 10 Investment Principals. The last one still haunts me:
"Achieving a good investment record is a lot harder than most people think."
How true. I think alot of critics have not had the weight of another's money on their shoulder. Until you carry that weight around for awhile, it all seems simple.
Carry on with what you are doing. It adds to and benefits many.
George
If Roger understood technial analysis he wouldn't be wasting his time writing for dumb-it-yourselfers. Can we get an EFT post today?
Our pop society does not value humility very much these days. There is a common misconception that humility and humiliation are related somehow. Nothing could be further from the truth. The admission that you are wrong and make mistakes as well as have victories is just a statement of the truth. I inherently trust a person who can admit their flaws while explaining their process of decision making. IMO Roger puts that in nearly all his writings. More market related, there seems to be a building wall of worry. About earnings and (more importantly guidance), about geopolitical events, about elections, about a long in the tooth recovery, about how much housing will actually hurt the economy, about past dating options to key officers of corperations. The alleged or real corperate malfeasance is the one that concerns me the most. All of these are occuring while the Dow is at all time highs. Theresa Lo's point is that buy and hold kicks butt any way it is measured. I've always found the hold part to be the hardest. Tom in Indy
George,
For some, I imagine managing other's people money is much easier than managing their own!
I don't know the context of Templeton's remarks, but I imagine the more politically correct marketing statement would be to the effect that it is a "burden".
All I can say is that I enjoy reading your blog on a daily basis...being one of those do-it-yourselfers ;)
Hope you don't stop..
Adding one more to the voices of support.
I enjoy this frank, level headed blog.
Thank you
Dromedarius
Oh yeah, I forgot to add the weakening of the dollar to the wall of worry. Another brick in the wall :-) Tom in Indy
Roger,
Thank you for your detailed response. Now let’s delve into the crux of the issue. CrossProfit is faced with the same dilemma as was put forth to you. CrossProfit analysts all work for established firms. Your firm (YSF) doesn’t seem to mind that you openly teach the general public how to build and manage their own portfolio. This is not the case elsewhere.
In order to avoid further confusion/misunderstanding as was evident from the numerous comments posted; a little background is required.
1) You do not owe anyone anything, which is why we used the word ‘appreciate’!
2) CrossProfit, as you know, is a regular contributor to Seeking Alpha and we do not understand why you were “put off”.
3) The entire comment was meant to deal with how you can dance at two weddings at the same time – NOT why you blog (as was perceived by the Seeking Alpha editors) and NOT whether you should continue and NOT whether or not you are providing an altruistic service.
4) The first ‘wedding’ is YSF as an investment adviser. The second ‘wedding’ (second most favorite phrase; “do-it-yourselfer”) is the private invester w/online broker account.
5) The comment was posted on an article whereby you gave incredibly GOOD straight forward honest advice to the average Joe. (We like that.) Apparently we should have spelled out the connection.
The Quandary: (Tom of Indy, thanks for the word)
Before delving into the issue on hand, let’s take another example, blogosphere verses mainstream media. For months now it is apparent that blogosphere is here to stay. Mainstream media has unsuccessfully attempted to ignore at first, then went on to belittle and now attempts to discredit the phenomenon. The bottom line is that conventional media feels threatened and justly so.
We now go back to the investment community issue. Schwab was probably one of the first to take a step in this direction. Along came the online brokers, ETF’s and blogosphere. Putting the three together spells trouble for the traditional investment adviser and managed account community down the road. Your firm may or may not benefit from your blogging. This is not the issue. The issue is about the bigger picture. With over 3 million active accounts with online brokers, traditional brokerages are feeling the heat. Ask BSC how many accounts they have lost in the past 12 months alone. (They probably won’t disclose numbers but if you review the quarterly revenue figures the trend is noticeable.) More and more people are managing their own money. Some are splitting their investment portfolio between managed accounts and self managed.
Before you correctly state that 90% of all equities/trading/investments are still in the hands of conventional firms and mutual funds, let us remind you that nothing changes overnight. Conventional establishments have correctly assessed the potential of this (self managed investment) trend. The latest proof that the day of reckoning is sooner rather than later is the free trading offer from Bank of America.
A good analogy can be taken from the optical industry. In the 70’s when B&L first came out with the soft contact lens, all of the hard lens manufacturers – without exception – ignored this new product. By the early 80’s the industry was touting figures showing how 75% is still ‘hard’ and ‘soft’ had ONLY 25% of the market. In the early 90’s the professionals in the industry were pointing out all the negatives of the ‘soft’ lens (infections, GPC etc.). By the late 90’s, Europe (excluding the Netherlands) was 85% soft and the U.S. closing in fast at 80% soft. In the past 6 years hard (RGP) contact lenses, which is still considered to be a professional’s first choice lens type, is less than 5% of the market. (If this theme sounds familiar it is because history is constantly repeating itself as in the better known industrial revolution – cottage industry era).
Convenience, product improvement and customer satisfaction won the day. If you think about this analogy this is exactly what is happening in the investment arena. We are not prophesizing that the outcome will be 95% private and 5% institutional as there are pension funds etc. Even if it were 95% (not very realistic, but one never knows!) some of that would remain with managed investment firms. An ever increasing number of people self manage their 401k and are gradually shifting away from mutual funds in favor of ETF’s and stock portfolios. Is there a need for a bond ETF? Sure, why not. Don’t forget that at CrossProfit we do not promote ETF’s in general. It doesn’t mean that because it does not match our investment philosophy for the average Joe that there is no need or demand for this type of instrument. On the contrary, we see a tremendous growing potential for ETF’s. We envision ETF’s cannibalizing the mutual fund industry more so than direct stock investments.
Roger, this is just the first half. Before we continue to post the second half on your site, based on your previous response, you either misunderstood the ‘exercise’ or have a genuine reason that you do not wish to discuss this issue.
Just two further clarifications are needed. First, the CrossProfit website is still under construction and after registering no one has ever been charged a subscription fee. As you can probably surmise from this post, we are in the process of formulating a business model to incorporate the new investment trend. Upon conclusion the site will be rebuilt and then perhaps you can justly ‘accuse’ us of promoting a commercial site or spam as one commentator put it. We tend to post articles on Seeking Alpha about stocks that are not covered on the site, so that too is not for promotional reasons. The only self promotion achieved is that people get to know the various opinions within the CrossProfit family and perhaps notice that we reach a consensus every now and then. We can honestly say to Uncle George that everything we have done until now is academic / altruistic in nature.
Second, as one commentator noted, we are not bloggers per se. The site that we accidentally linked to in one of our comments belongs to Faisal Laljee. We have been invited to post articles on his site as guest authors on numerous occasions. If you think his site is ‘pathetic’, so be it. We think that ALL opinions are valid learning material whether we agree with the author or not.
BTW, we previously disclosed in other articles and comments elsewhere that the CrossProfit advisor on ETF’s is Mr. D. Kimche, former Chairman of the Board at UMB.
CrossProfit
Disclosure: This comment was submitted by CrossProfit and does not state an investment opinion and is for educational/conversational purposes only.
http://www.crossprofit.com
You ask why I was put off yet it seems from most of the comments left that my way of reading your question was not unique..
I am just doing my thing; my real job and my part time job or maybe it is more of a hobby.
My hobby may evolve into a career if the entire advice industry goes under. I am not going to be the one to solve the future of the RIA business. I enjoy managing money and I enjoy writing. I'm a simple guy.
CrossProfit
Isn't there a philosophy blog where you can post your comments?
Your taking up too much space here.
OG
"Roger, this is just the first half. Before we continue to post the second half on your site, based on your previous response, you either misunderstood the ‘exercise’ or have a genuine reason that you do not wish to discuss this issue."
Oh God, there is more. I will proffer that this appears to be an exercise in pontification that appears to have no end-point--either anticipated or dreaded (I vote for the latter). And, I would freely offer that I would never cede a cent to any money manager whose viewpoint was so steeped in condescension. Unbelievable.
Post by Leisa is spam to attract attention to her flowery site.
CrossProfit has a point and so far no one has given a direct answer. George, from past writing you seem to be knowledgeable in theses matters. Do you think that Roger’s blog and others are speeding up the evolution for self managed portfolios?
It appears that Anonymous and Consulting CFO are merely cross dressers of CrossPoint. Spam, self promotion and inappropriate discourse are not activities that I engage in, so to be accused of such is laughable. But I do suffer, regrettably, from being long winded, and that is a trait in which we can both revel in sharing--as well as exchanging war stories on being Consulting CFO's, as I am one as well.
This blather about what Roger's site is or is not doing relative to professional money management is pointless on this site. It might very well be something that can be explored ad nauseum on your own site. But to belabor it here is well, spam of the worst sort.
Nevertheless, I do have an opinion about how Roger's site (and those of others) affects the investing public of one (ME!). I have money to invest, and I do it myself. (I also clean my own home--and I built my own home, so I'm a breed of DIY'er extraordinaire). There's some self-promotion for you. Having said that BECAUSE of Roger's generosity of both his time and knowledge, I would consider handing him my wad (though it might be too small to meet his requirements) to manage once I crossed the threshold of not wanting to do it myself.
So here's my conclusion: (1) Roger's site (and those of other bloggers e.g. Ritholtz, Cara etal) is like Home Depot...you can do it and he can help. So because of these knowledgeable and generously-shared professional perspectives (absent hubris, which is always refreshing) we DIY'ers can do it a little better. But we're going to do it ourselves regardless. Roger (and others) ensures that the we're going to lay our tile straight and not let the grout set up on it (or get in our hair); and (2) When the time comes (tile still isn't straight but it’s uneven to the point we’ve stubbed our toe, grout is not only in our hair but has set up in the kitchen sink) that we no longer wish to be a DIY'er, we are going to turn to someone we know and trust. And that person might just be Roger.
I think that addresses a point or two brought up in CrossPoint’s peculiar question.
this just won't go away. funny.
Leisa you comment amuses me in that when I told my wife, Joellyn, about the original comment that I was replying to she used the Home Depot analogy. Specifically she said its like taking a class there on how to put in tile.
blogs are not speeding up the demise of professionally managed accounts. I doubt there are even 1 million people that regularly read blogs
Well, the Home Depot analogy is just too fitting, so the coincidence is expected. --and it is a testament to the durability of their ad campaign and the catchy slogan! And laying tile is the hardest thing to do! I'm the ultimate do it your selfer, but I would never lay tile--it has to be perfectly prepped, laid out, and the underlying cost is so expensive that if you screw it up, it will make you weep daily. I'm sure there will be more baiting, but I've taken by last bite! It's not hard to fill up on stuff such as that. It's like being in a Franz Kafka novel--bizarre!
Roger
When laying your Home Depot tile, do you use those little spacers, or line them up by sight?
we actually have done tile work in our our house and yes we do use the spacers.
in all seriousness my wife has re-done most of our cabin (as in she has done the work) I help with lifting or other stregth activities that the project might need.
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