It is amazing how little I know about subjects I know the most about.
Yep, stocks and markets for one thing and angel investing.
I have run a partnership on investing since 1998 and been doing angel investing since 1992. I have now officially invested in a Company that has reached a billion dollars in market capitalization…Lifelock ($LOCK). Still, I have no idea what I am doing. I am witnessing a miracle and it is wonderful, but no secrets have been revealed. I saw a product, met a team, had an instinct and felt the price made sense. I could not have ‘Known’. Now that I have seen it, I have no idea if it matters. I do think there are traits in ideas and people I will get better at, but still I can’t say I know things on my fave subjects any more reliably.
I have a big vision around the financial web and between Stocktwits and all the companies I see to invest in and even do invest in, I sometimes feel that we are as far away as ever.
It’s part anxiety, part paranoia and part knowing that I can’t possibly know everything.
Whenever I open my stream up to questions, I get hit up for stock advice. I love talking about stocks and markets and share what I own and am thinking about, but I try hard not to give out advice about particular stocks. It’s been done. I don’t think it scales. The web is about scaling.
I have my thoughts about the bigger picture. But the market doesn’t care what I think. I need to worry about where to allocate and how to manage my risk now. I can’t afford a 50% draw-down like many “long-term investors” suffered a few years ago. That’s unacceptable to me. I need to manage risk real time. Not wait until thing get hairy to start to worry. Proactive, not reactive right?
So when we’re in these situations, and they’ve come in the past and I promise you will come again, we just get much smaller and look to other less-correlated areas. It’s okay to do that. You don’t always have to be leveraged long or leveraged short stocks no matter what, even if you don’t have a clue what’s going to happen. That’s how you get crushed in this market. By guessing.
According Ted Williams, the first rule for good hitting is to get a good ball to hit. He didn’t say to swing at all of them as hard as you can so eventually you’ll hit one really far. His advice was to wait for your pitch. He said, “A good hitter can hit a pitch in a good spot three times better than a great hitter can hit a ball in a questionable spot.” And it’s true. Common sense even. So why should it be any different in capital markets.
Be careful when you ask people for their opinion or advice. Be even more careful of people willing to dole it out all the time.
Find people that help you discover more ‘fat’ pitches. Find people like JC who paint pictures and see a lot of pitches and pictures themselves.