Marc Gerstein

Research analyst, portfolio strategy, rules-based models
Marc Gerstein
Research analyst, portfolio strategy, Rules-Based Models
Contributor since: 2006
Company: Portfolio123 and Ariston Advisors
Yorick: Two responses
First, I'm incredibly impressed that you you posted. I wasn't sure anybody sees instablogs. Cool!
Second, I think you've been seeing too many Oliver Stone movies. :-)
"This is an entertainment web site. Clicks matter more than content."
Yup, you got that right. Now that I've dome my promo here and with Michael standing down, a decision I support, I'm on to an article on FitBit. Don't know squat about the stock. Don't care. But I do love step counters and want to learn more about them.
I have a product question, re: the category.
I was listending to Mike Golic the other day (espn morning how for those who don't know) and he was talking about his fitbit saying the results were crazy because the number of steps it showed was way out of proportion to what he could possibly have done that early in the day. Then, someone in the studio pointed out that fitbit also counted arm movements. He says he's enough of an arm mover that it makes sense.
Do you, or anybody else, know if that's true?
I've got a little misfit thing in my pocket that seems to be doing a good job counting steps and it's more or less in line with the built in iphone counter. But might arm movements by one who sits a lot distort the overall picture if one uses a writ device?
“Marc - nice call on RadioShack - how did that work out for you?
http://bit.ly/1MF22zP
I've never encountered more of a bully on this site then you, yet you have no record to run on. So I will continue to escalate and stand up against bullies like you. You can't hide from your record as everything is preserved.”
Michael, thank you, thank you, thank you, thank you, thank you, thank you, thank you, thank you, thank you, thank you, thank you, thank you, thank you!!!!!!!!!!!!!!!!!!!... PS. I'm the guy, or at least the first one, who clicked "Like" on that comment. :-)
As much as I’d love to come on Seeking Alpha an invite its readers to follow me on competitive web site to which I switched, I wouldn’t dare do so as a matter of basic business etiquette. But you, having chosen to launch such a completely stupid attack (How many hours did you devote to this?), you’ve given me a better entry point than anything I might have dreamed of.
Did the Radio Shack call suck? Hell yes! Actually, in my years in this business, I’ve made many much worse than that. Some are on SA. Many aren’t. I thought I could pick and choose among Chinese stocks. Nope. Perhaps my single dumbest writeup was my 1982 Value Line stock highlight on Air Florida. Sunbeam was another pre-SA gem, one that really nailed home for me the idiocy of the evaluate-management mantra. Chainsaw al was the most dynamic executive I ever met. And, it turned out, a useless bag of wind. But then, other managers who impressed me turned out to be truly brilliant: Ted Turner, Larry Bossidy, Reuben Mark, Bob Daneil. It goes both ways.
I’ve also made some great calls. I may have been one of the first analysts anywhere to be bullish on Compaq after it came out, and to stay bullish even after the consensus view was that IBM’s new luggable would kill it (IBM’s offering instead, died a quick death). I do remember some curca-2006 SA pieces openly worrying about housing and housing stocks, and having caught some private flack from sell-siders who were bullish. And I was well ahead of a lot of the micros SA pro people have paid big bucks to read about. But ultimately, pulling individual items out of mothballs is a dumb gets-us-nowhere exercise.
At the end of the day, though, picking one dud like Radio Shack or one winner like whatever and holding that up as an example of anything is for babies. It’s the full body of work that counts and you can’t see it here, and unfortunately (not my choice), you can’t see it here on SA.
What you do see from me on SA is, essentially, chickensh** because SA is committed to getting write-ups on individual stocks and playing the social media game. That’s not me. I’m about what stands a good chance of delivering good $$$ results for readers, and in my opinion, as well as pretty much everybody who knows anything, that’s about baskets of stocks, portfolios. SA has and probably would continue to l publish such material along those lines as I submit, but the site can’t display it correctly. SA remains deigned primarily around the 1800s-ticker tape model, where it posts the latest, and then it posts newer items on top etc., until things scroll out of sight often in an hour or so. Hence without the Yahoo ticker links, a deal SA lost, you go quickly into obscurity unless you play the social media game but that means telling people what they think they want to hear and I don’t indulge in reckless garbage like that. The SA team does not understand longer-shelf life and evergreen content. I’ve tried to communicate with them, but found their minds to be more tightly closed than the DOD server Hillary should have used.
So what you see on SA from me is a sad, frustrated, pitiful little tossup here and there, but that’s it. I’ve gone elsewhere now (you’ve undoubtedly noticed I haven’t published an article here in a log time). A lot hasn’t been readily visible because it’s been premium. But as much as I love the premium business model, I found it worthwhile to approach Forbes to propose termination of the newsletter and launch of a different effort, one that is, ironically given my pro-premium leanings, ad-supported and available to all for the low, low price of zero. Forbes agreed and we just got off the ground about a week ago. (But even at that, you’ll never see the volume from me you see from the SA favorites; I’m aiming at two per week, and even that’s a strain since I have a job and other things to do.)
In sum, picking individual stocks, whether through cool articles or hard-boiled stock analysis, is a loser’s game. It’s about baskets of stocks, portfolios. What is dissed and denigrated on SA as their “Quick Picks & Lists” section should be, if they would listen to someone who doesn’t work inside the company, be their lead feature. It should give you full-fledged portfolios you can buy and mange as is, and if you really want to go one at a time, at least provide a solid rational investment-merit-based underpinning for the articles that are published. News events, popularity, stocks written up on that basis, is great for the ad agencies that pay for the ads. It’s great for bull-session chatter. But it’ll kill your asset base. Anyway, I’m building my vision elsewhere.
So those of you who really want to know what I say, free from the rants of this little brat and the 1800s-style SA web architecture, here’s where you can go.
For a fun article on my portfolios-over-stocks sensibility, go here: http://bit.ly/1NHtcmI
It’s entitled “A Stock Market Pro’s Possibly-Bizarre Confession.” It explains why I cannot now name a single stock I own (when I need to fill in ownership disclosures, I do a last-minute ticker search). Now, since SA has softened its no-theory stance (or did they, my experience has been that I’ve seen editorial policies violated almost as soon as they’re announced), I might be able to publish it here, but I’d have been lucky to get 20 page views. On Harvest (hvst.com), where I published it (a site to which I was introduced by a guy who left SA), it did quite well. (They don’t pay, but I I don’t need SA’s fees. I value exposure.)
Now, here here’s part 1 of a well-received four-part series explaining to novices why stocks are priced as they are: http://bit.ly/1NHtcmM I always dreamed of being able to offer this on Seeking Alpha, (and this site desperately critically needs it) but the first time I submitted something like this, they rejected it telling me they don’t want theoretical articles – at least that’s what they said back then -- and that I should stick to doing actionable pieces. So this was published a couple of months ago on a new site launched by a guy who left SA.
Finally, if you want to see the new content set I’m doing, go to this mini-portal on Forbes.com: http://onforb.es/1NHtcD2 You can follow me there if you’re interested.
FWIW, you can also see everything now by following me on SA and checking my insta-blogs. But it can’t be posted here until after the lapse of a 72-hour Forbes embargo. For the most part, though, time sensitivity is low with me. So if you want to stay loyal to SA, that’s fine. I’m putting it in intsa-blog rather than as articles because I can’t/won’t give SA the exclusivity it requires but in my opinion, doesn’t earn.
So is it worth following my stuff? Am I a lousy analyst as what-his-face here says? Everybody is entered to his/her own opinion. As resident AMZN-labor relations savant is no exception.
For alternative views, you may want to touch base with Warren Buffett (with whom I worked back when I was the first analyst to launch regular coverage of BRK), Robert Schiller, who was sufficiently impressed with what I wrote back in the good old days on SA about his then-new housing index and the housing market in general to insist that I be invited to chair a real-estate derivatives panel he organized, and most recently Rob Arnott, one of the biggest names associated with today’s “smart beta” phenomenon, who sought me out privately to express his appreciation for the Smart Beta post I did last week on Forbes.
So some think I’m good. Others think I’m garbage. It’s all good. Considering the kinds of people who line up on either side of the debate, I’m fine. I certainly am not as doofus hiding from my record. I want you to follow me wherever you wish and see the whole thing.
OK. Michael. Your turn. Keep escalating, as you say you want to do. I actually contemplated submitting an “open letter to SA” article. I’m not sure if SA would publish it. They absolutely will hate the sentiment. But one thing I enormously respect is their ability to accept and debate criticism in public. But with your little escalation, it may be sparing me the burden. Or, it may be supplying me a big head-start copy-edit-and-paste draft (which is why I’m devoting as much time to this as I am).
Oh, one more thing. Assuming you do "escalate," please make the next attack original. I'm not going to repeat what i've said so far. So again, be creative. :-)
"I stand by my call Amazon is a sell at $532. Let's see who was right in a year."
How childish! This is an example of why the one great Seeking Alpha is turning into a punch line.
When did I say AMZN was a Buy? Can you read? Do you even have a clue how to create an argument for or against a stock? And by the way genius, my name is Marc, not @Marc.
I said your PE argument was idiotic and it is. If AMZN is a Sell, it needs to be so for a different reason.
Do yourself favor and stop answering me. You look worse and worse each time you do.
"The discussion has devolved into ad hominem attacks rather than any discussion of the topic of the article."
Actually, the idea of "ad hominem attacks" is a creation of the world of social media and it's inherent stake in fostering as much opinion as possible regardless of merit (page views are most crucial so quantity is needed). The idea is to give idiots a chance to participate without being called out as such.
In thew world of investing, where real people commit real money and are at risk of suffering real damage, this is a horrifically dangerous idea. I had thought individual investors had learned, back in the early 2000s and the Wall Street scandals, that the speaker himself/herself may be the most critical element of the idea that is expressed, because we ALL come from someplace and are influenced by who/what we are.
On a superficial level, the disdain for ad hominem attacks may seem to justified under the "appeal to authority" logical fallacy, which maintains that a proposition cannot automatically be deemed true solely because of the identity of the speaker. But that's not what's going on in our context. Nobody is (or should be) saying a proposition is correct or false because of who is asserting it. What is being suggested often and sometimes said outright is that in evaluating OPINIONs expressed (which by definition cannot be "right" or "wrong") its very much appropriate to consider how it may be influenced by the person expressing it. If I go to an office and taker an EKG, I have a right to give more weight to an interpretation from a cardiologist than from a janitor who saw it and picked it up. If you don;'t know why, that's a you problem.
On SA, when an amateur or rookie investor expresses an pinion that is published in a way that makes it hard to differentiate from that presented by someone who is experienced, it is important to try to discern how the writers background may impact what is said. This is not to say all pros are good and all non-pros are bad.
For example, Gary J is an example of a non-pro who speaks good sense. I don't care what his opinion is on AMZN. What I do note is his thought process, which was intriguingly expressed a bit above"
"Some stocks trade on P/E (Walmart/GE. etc.) some trade on prospects and may do so for a very long time (20 years and counting for AMZN). The CEO tells those paying attention EVERY YEAR they are moving earnings down the priority list in favor of growth, innovation, infrastructure and customer service. The smart money on Wall Street understands this, like it, and rewards the stock.
"Bill Miller (look him up), a top analyst, says - If you are going to value AMZN by the usual metrics you are going to get it wrong.
"I am here and in the stock market to make money."
This is exactly right (Gary J is the sort of non-pro I’d read, and I wish somebody in SA editorial would figure out how to identify between those who get it and those who don’t) and has been the subject of published papers by no less than Robert Schiller and Fischer Black. The sort of AMZN PE analysis we see so often on Seeking Alpha is strictly for-dummies level garbage. Even Graham and Dodd knew that (as is well known to those who actually read their book and not novice-blather occasionally plastered on SA).
If you want to be kumbaya-social everybody-gets-a-voice- everybody-gets-a-parti... have at it. But make sure you concoct a good explanation in case you blow away your kids’ college tuition, or your and your spouse’s retirement nest egg. Speaking for myself, I’d rather be an arrogant nasty ad-hominem-attacking a** hole -- with assets.
Now speaking of the person of the author, what I get here from this article and his non-profile is that he has no clue about stock valuation, has been OK with AMZN because he likes the company, buy has major issues along the lines of its employee relations. This could have been a GRTEAT article had he summarized the AMZN situation, put it into the context of modern corporate labor practices in general (combining it with a discussion of WMT, MCD, etc.) and assessing the potential long-term investment issues, which could become very substantial. MCD and other restaurants and the impact of new developments in minimum wage could be discussed. So, too, cold/should the potential impact of work-practice reform on corporate efficiency and future margin trends. The role of globalization is part of the picture as is the psychology of the U.S. consumer, who wants better pay/conditions at their own company but equally wants oppressive/abusive conditions at companies who make stuff they buy so prices don’t rise. This is a complex and fascinating topic and as noted, could have been, had SA’s editorial staff possessed the professional competence to recognize that this article was a piece of confused gibberish but to also recognize its potential and return it to the author with suggestions as to how it could be made into something excellent, something which would have gained credibility from the author also discussing where he’s personally coming from on this issue.
Actually, out of the mouths of babes . . . .
Michael, I owe you for having inspired me to take note of my changed publication efforts. i don't need the chump change SA pays to authors so there is no way i can justify giving SA the exclusivity it requires for its typical premium articles, I just realized I can add SA to the site that republish my Forbes content. I did accumulate some followers here who were interested in what I was offering, and just realized that I can reach them via the SA InstaBlog. i do have about 2,000 followers and considering the sort of things they were likely looking at when they clicked, it probably makes for a valuable audience.
Shame in me for not having figured that out earlier! Thank you Michael!!!!!!
Bye for now. I've got some pasting to do!
"I find it curious that you have written 218 articles on Seeking Alpha, yet you insult the authors' and the site"
And you'll also notice that it's been about a year since I last published here. I used to revere this site and was once proud to publish here. Lately, though, that has't been the case as professionalism has increasingly taken a back seat to other SA priorities. So lately, I've been publishing elsewhere.
"Perhaps, next time you will display the intellectual curiosity to research the background"
I did. I always look at the profile of an author whose article I read. While I applaud your decision to use your name (I've had open arguments with SA on their horrific decision to tolerate anonymous submissions), you are the one who chose to say nothing about yourself other than "occasional investor" and offer some nice but irrelevant quotes. I googled you but came up empty. I suppose I could hire a private detective, but no. There's only so much effort that's warranted to read an ad-supported internet article on a site now well known to be overly tolerant of slovenly analysis. If you are unhappy with my understanding of your background, then change your profile and tell us more about yourself.
You're right, I haven't read any of your other pieces. I might have done so had you provided an informative profile and/or had this AMZN piece had something to entice me. (I'm always on the lookout for new authors to follow and have been finding a bunch elsewhere. But here, it was a "no" on both counts.
So how many opportunities do you want to make a good first impression? Perhaps if you would have rolled with my initial comment (which, by the way,included the proverbial smiley face) or even ignored it, I'd be less dug in. (Notice I did not address your valuation nonsense at first. i was more interested in addressing lousy employers in general and having a bit of fun with the quotes you used in your profile in lieu of telling us about yourself.) But every time you reply, you seem to be digging yourself deeper and deeper making this first impression worse and worse.
"@Marc - whatever. If you can't understand my simple and straight forward argument - then that's a shame."
Actually, having had the misfortune to have worked for rotten companies, I probably understand the situation better than you do. And that's why I know it's not a specific AMZN problem, but a much,much bigger one. I suggest you expand your horizons.
" never applied to Amazon and would never even consider applying to a place like Amazon. Amazon wouldn't consider me either as I don't fit their type A workaholic model. I value having a life, enjoying time with my family, and pursuing interests outside of work."
Yes, I'm sure you do. My having lifted that quote from your profile was my amusing way of casting you more as the type who would have others work for you under abusive conditions, while you told them it was really for their own good, perhaps by reading that Epictetus quote to them. Maybe you can send it to Bezos so he can use it.
And by the way, you really din't make any simple and straightforward argument . . . oops, correction: your description of AMZN as ridiculously overvalued was quite simplistic as would befit a self-proclamed "occasional investor."
The simplistic occasional investor sees a PE of 346.5 times estimated EPS and goes "Yikes! cWhat a ridiculous valuation." Knowledgeable investors who have read Graham & Dodd and other serious authorities understand when a particular ePS datapoint may not really be usable in a price-based valuation.
The simplistic occasional investor might look at AMZN's PS ratio of 2.66 relative to the internet retailer median 1.47 and go "Duh." Knowledgeable investors who have read Graham & Dodd and other serious authorities understand that AMZN's PS, while relatively and historically high, are not outrageous in the context of many growth stocks, would understand the relationship between sales growth prospects, margins, and margin growth prospects and analyze and discuss the issues accordingly, particularly in light of the surprisingly good news re: AWS and its potential implications.
I haven't look closely at AMZN in a long time so i really don;'t know if this is a good tie to sell. But I do know that if it is, making a case for that course of action would require far more than what you delivered. But it's not as if I expected more. I read the news and I know full well that when AMZN hits the headlines in a big way, Seeking Alpha is a good place to come in search of some laughs. (I go elsewhere for professional analysis.) You delivered. For that, I heartily thank you (although to be honest, I have no idea who you are; I was figuring Paulo Santos would be the one to supply the guffaws. But what the heck. I got my click's worth!)
I wouldn't be at all surprised if the NYT has it right. AMZ may well be a terrible place to work. So perhaps their employees will exit en masse and apply to . . . WMT?
Actually, lots of workplaces suck and probably more so today than ever given the increasingly automated ways to monitor employees and the increasing pressures to slash costs. Some miserable employers pay well. Many don't. It's not an AMZN problem. It's a large-scale societal problem.
And employers love to try to paper it over by referring to human chattel as associates, team members, etc. or, perhaps, concoct we're-making-you-better references such as:"Tentative efforts lead to tentative outcomes. Therefore, give yourself fully to your endeavors. Decide to construct your character through excellent actions and determine to pay the price of a worthy goal. The trials you encounter will introduce you to your strengths. Remain steadfast...and one day you will build something that endures: something worthy of your potential." Source, J. Bezos. Oops, correction: It's from Epictetus as quoted by the author in his profile. (Dude, did you use that as part of an employment application essay for Amazon HR? If you're writing for SA, I guess you didn't get the job.) :-)
"I don't owe you (or anyone else) anything."
And that, I suppose, is the essence of Paulo.
Speaking for myself, when I write, I absolutely positively do owe a lot to my readers. I owe them my best effort to present an honest and well researched opinion.
Obviously, you are quite different. Yes Paulo, we are very very different people.
What planet are you on? Whjen one reads an article inrtended to influence opinion on a stock, one expects/an author to have done his homework. AND DON'T YOU DARE WHINE ABOUT HOW MUCH TIME YOU HAVE OR DON'T HAVE. When it comes to posting hit pieces on amazon via article or comment, you clearly have all the time in the world. And if you aren't getting paid enough to do a professionally competent job, then stop writing and find something else to do.
And by the way, did you see my first comment? This isn't necessarily about following every lead everybody throws at you. It's about following the leads necessary for the story you -- and you alone -- chose to write andf accpeted Seeking Alpha's money to write.
AND EVERY SECOND YOU SPEND ANSWERING ME OR ANYONE ELSE HERE IS TIME YOU COULD BE SPENDING DOING YOUR JOB AND INVESTIGATING A SOLUTION TO THE RIDDLE YOU POSE.
>>1426, well then provide us with the 3P (FBA) seller indy data and let's be done with it.
No Paulo. You are the one who posted (and got paid for) an article entitled "Riddle me this" that raised lots of questions and provided no answers -- aside from a monotonously-predeictable effort to "talk book" on your by-now comically-well-publicized short.
Maybe I was taught badly, but FWIW, I was taught that it was the analyst/author's job to research facts (and make phone calls where necessary if data is not clear).
Eli, David . . . Are you here? What are the standards? Is it now acceptable on Seeking Alpha for authors to cast aspersions as they talk their book and expect readers to go out and do the fact gathering and analysis? Is this the new direction of Seeking Alpha?
Much appreciated.
I know the press meeting deadlines. I know where you're coming from.
Thank you for pointing that out. That's a much more interesting study. I was particular intrigued by the overall full-period correlation of -.27. Not what one might have expected going in.
Brad, are you there? Or anyone who's been watching this sector for a long time. What else was happening back then with real estate? Common;cities or differences with the likely intermediate-term future?
Yes, I remember all of it. No period is ever identical to any other period. The best one can do is try to look for some indication of how things performed in the context of rising interest rates. The 1970s, albeit not a perfect sample, is a heck of a lot better than 1995-2015, which is wildly different from what we're likely to see in a very major variable.
And for the record, the differences you cite, or rather their absence, would be an added concern. REITs could benefit simply as an emotional hedge if serious inflation were feared. That may be absent going forward.
Is there research or data addressing the 1970s?
I'm uncomfortable with Anderson's study because it only address the 20 years. During that period, there were some penny-ante rate increases here and there. But the overwhelming characteristic of the period is substantially falling interest rates. If you blur your vision to look at a chart, or plot a trend line, you see straight down either way.
I suspect there may be a big difference between rate declines that are brief zigs an a downward mega-trend, versus an upward mega-trends. And considering where rates are today, it seems we do have to consider the upward mega-trend scenario.
We know the basic math with 100% certainty. Upward denominators in valuation models (cost of capital, discount rates, etc.), pushes REIT valuation down. Upward numerators (gross rentals, better FFO, better dividends presumably from a decent economy) pushes REIT valuation up. Does inflation push asset value up? Maybe. Maybe not.
Those are the issues that need to be addressed: Potential inflation (which may or may not become troublesome going forward) and how FFO etc interact with discount rates etc. The 1995-2015 study gives us nothing on this. We need to go back to the 1970s, either with historic data or with some sort of credibly simulated modeling.
Yup, Betting Against Beta, that's the paper. Thank you!
Nice article.
As i recall, the theoretical explanation for the anomaly is that many money managers have to compete on return but can't generate return through use of leverage (due to the account constraints) so they chase high beta stocks, causing excess demand for those relative to supply, and a corresponding shortage in demand relative to supply in the low beta area. The result, low-beta stocks being underpriced due to low demand, and hence, better positioned to offer higher return (with the reverse true in the high beta world). I can't recall if that was in "Buffett's Alpha" paper or if I saw it in a different paper.
"Am I missing something here besides my brain?"
goodness yes, you are missing a lot, a heck of a lot, and you won't get any of it on Seeking Alpha because the site can't generate traffic for anything except "actionable" articles on specific tickers. Contrary to what Santos has been pushing re: AMZN, there's much more to valuation than P divided by the latest E. To go beyond a Valuation-For-Dummies level:
Check the book "The Dark side of Valuation" by Prof. Aswath Damodaran (NYU Stern School of Business), a high-regard valuation expert who once in a while contributes on Seeking Alpha, but to really learn from him, read his books.
Also very highly recommended is Robert Shiller's 19845 Brookings Paper on Economic Activity that's titled "Stock Prices and Social Dynamics," one of the most brilliant and under-appreciated masterpieces describing the process of stock-market price setting. You can easily google it and download a pdf.
If you want a more streamline quicker set of reads, check my valuation 4-part series on TalkMarkets.com (the sort of stuff i would love to have been able to offer on Seeking Alpha, but I've given up trying to do anything serious here -- it's not that the editors won't it, they probably will, but the site can't get traffic for it and I'm more interested in traffic than SA's article fees).
Have you contacted Sandvine or IBD or Amazon IR to pose this riddle?
As other commenters have mentioned, there is a lot to AMZN Prime apart from video watching. And even within video, some here have criticized AMZN's offering. I disagree that it sucks or anything like that, but it id clearly aimed away from the mass audience; it's more geared toward the art-house film type crowd (such as me; I probably watch more AMZN video than many, but i can easily see why most people would run up the dominating majority other time on Netflix). But even so, as you write, the stats seem puzzling. So yes, it is a genuine riddle.
But I also find it odd and dsappointing that the SA editors accepted the article. I was under the impression they had backgrounds in journalism. When I worked at Reuters, I didn't actually work in the news division, but I did know and collaborate with some high-placed editors and know there's no way in hell they'd have let this get into print without comments from the key parties, or at least an effort go get comments and reporting of their refusal to comment.
And on the other side of the aisle, in investment research, the result would have been the same. There's no way any research department would allow anything like this to see the light of day without a serous effort to communicate with the parties involved in an effort to get some clarification.
Paulo, I suggest you do the right thing: Get on the phone. Work to reach people in the know. Dig for a resolution. And then, share the findings with the SA audience.
"Can you explain to me how I could confidently choose someone who WILL do better?"
Opening your mind would certainly be a critical step one. But it is obvious that you are deeply committed to your belief in mediocrity.
I'm not going to keep pounding a dead horse here. I have my own experience; I have my own brokerage account. I know plenty of others in similar situations. Many such people can be found here on SA, although not easily given the company's traditional preference for crowd sourcing rather than quality advice. Hopefully, the new premium service will point SA in a new better direction and make it easier to find better sources. Whether you open your eyes and look here or elsewhere, however, is entirely up to you.
And by the way, I absolutely positively do not make a simplistic "this time its different" argument. You read Chilton's book. Then if you want more from me, read one of mine. Whether you do or don't best of luck to you.
"Marc, I'm sure we'll have to agree to disagree, but I'd like to make one point anyways.

If there were such a strategy that kept beating the market long-term (20 years+), would it not get increasing attention, and eventually become the average because of the number of participants replicating it?"
First things first. Forget 20+ year, at least for now. The quant-oriented approaches that can and do beat the market haven't been around that long. Modeling platforms have been in existence for decades, but it's only been since the late 90s that they have actually progressed beyond trade-show gimmicks to serious tools. Father Time will eventually make 20+ years possible, but we're not there yet.
Secondly, who said anything about becoming the average. This isn't the world depicted by the old Kurt Vonnegut short story involving forced equality (where high I.Q. people had to wear earphones through which a pitched sound played at regular intervals to dumb them down by interfering with their concentration). We live in a world where talents vary. The average will remain the average. But don't place stock in articles that deny the possibility of the superior. Just because dumb professors and dumb reporters are too dumb too envision talent, don't assume talent doesn't exist.
Beyond that, human behavior is an amazing phenomenon. You'd think that would be the case wouldn't you. And there is an element of partial truth. To stay ahead of the market, one would need to constantly evaluate and tweak what is being done; strategies that worked spectacularly in the early 2000s have been somewhat arbitraged down by more and more investors using them, but creativity and innovation still gets rewarded. That, actually, is one of the flaws in the studies relied upon directly or indirectly by the article you saw on nerd-something dot com. They assume strategies must be static. That's deadly not just in investing but in any endeavor. Being dogmatic, rigid, or brain-dead is not conducive to success.
More interesting, though, is the issue of "increasing attention." I can't answer that. You'll have to ask Seeking Alpha to give you an answer. Several times I have directly pitched to Seeking Alpha to work more closely with my company to create more idea-generation content that would make available some of what I and others do in this regard. To date, they've shown zero interest. and they're not alone. Ad-supported web finance is, as I've mentioned, responsive to the needs of advertisers, not investors. Beyond that, they're generally staffed and managed by people with journalistic backgrounds, not finance backgrounds, and those people understand news-oriented articles, not systematic idea generation.
But I suppose a bigger issue is you (the plural you). You have to demand better. If you don't, if you keep clicking on topical articles rather than other that offer market-beating ideas, that's on you. That may be why SA, sites like them, and the advertisers who pay the bills do as they do. Maybe I was wrong to expect too much of them. On reflection, who can blame them for giving you what the content on which you click.
I guess the bottom line here is that if you want to lock in on the notion that mediocrity is all you can get, then that's your choice and mediocrity is exactly what you'll continue to get. I suppose the benefit of the subscription model is that it allows those who believe in better and want better to buy it and benefit from it.
P.S. Don't assume David Chilton is a great genius. Just because he f***** up and wrote a book at it, don't assume everybody else has to. Maybe he'd do better if, instead of writing a book pointing fingers at others, he'd look to himself and reassess what he did and how he could do better.
"Marc, I would be surprised if you've never heard of studies that indicate active investing is unlikely to beat the market. I guess my "random guessing" comment was an exaggeration though. One study I googled just now:
http://nerd.me/10YnsLZ"
Yeah, that same rehashed stale pablum is what one should expect on a site that calls itself nerd something. It's not practical to rip it apart in the context of a comment board, but the short answer is that seat of the pants decision making doesn't beat the market. But sensible disciplined strategies can and do. The profession and academia has gone way beyond the fluff upon which that author relied.
"I'll reiterate a comment I made elsewhere in this thread, that SA has become successful over time without this pay structure. Unless you feel that content in the past was poor, then you surely agree that a new pay structure is not needed to result in quality content. It was not needed before, and is not now. "
Actually, SA has undergone a lot of evolution since its early days. There's always been and still is some terrific work done here. But the introduction of author fees attracted a lot of bad content. Every now and then, SA has tried to reassess who is getting published. But from what I can observe from looking at the site, I suspect it may be too much of a burden for the man hours that are available. Bear in mind that comment moderation can lead to a distorted view of where things stand, to the point where I'm not sure if company insiders realize how often in real world conversation among investors, simply saying the words "Seeking Alpha" can generate sneers, chuckles and eye-rolls.
I do think a new pay structure will help. In a purely ad supported world, it does not hurt SA to publish bad content and it can certainly help. As people love to stare at a highway pileup, it can be fun to read and bash bad articles (not necessarily on SA because of moderation, but SA can't control what's said about authors off the site). Subscription changes the game. If readers have to pay, they are not likely to be so keen to laugh at bad authors but are instead more likely to focus on those who can really help them make money.
Or, if they do want to pay for entertainment, at least they're likely to demand good entertainment -- i.e., authors who are self aware, up front and effective about the entertainment aspect of what they're doing -- which is also fine. (And actually, there's a part of me that might want to pursue that niche; in a recent newsletter, I actually introduced my dog Max and made a case for his being the world's number one oil-price forecaster!) But entertainment that fools itself and some readers by thinking it's serious content -- that's bad stuff and will not likely survive in a subscription environment.
"Marc, since there are multitudes of evidence that a single investor has essentially zero chance of beating indexes over the long term, how would you go about choosing which subscription(s) to buy and follow their advice since each individual one will fail? Evidence shows that advice from a particular individual is no more likely to be successful in the long run than your own random guessing. Personally I think exposing yourself to as much content as possible gives you a better chance to find collective wisdom, instead of using subscription advice and limiting your information input. "
Great question!
But I do have to take issue with the idea that advice from any one individual is no likely to do better than random guessing. I'm curious as to what sort of evidence you see. I really disagree with that -- unless you pick the individual randomly, in which case, that would be a problem.
It's hard to answer the how-to-choose question until we see how SA markets this; what sort of info is given to prospective subscribers. And it will be up to the participating authors to effectively present themselves.
Hopefully, there will be good-enough pitches that let prospective subscribers figure out where the author is coming from, how he/she goes about making investment decisions, and that looking at the authors articles can effectively complement it. I know SA asked for three different pitches of varying lengths; ignore the two shorter pitches and look only at the longest. This isn't like selling soft drinks. Hopefully, SA will figure out that at least 500-1000 words will be needed and that the quick pitches they're asking for are inadequate. If you find a combination (pitch/past articles) that appeals to you, that's good. If not, then don't do anything and wait for other authors to come along.
It's tempting to say you should track returns on stocks the author recommended in free articles. That's relevant. But it would have to be tempered by realization that even the best ideas don't work every day. Try to get a sense of whether things that didn't work turned sour because of things the author could not reasonably have been expected to see ahead of time (example: pretty much everybody was caught by the plunge in oil prices), or because of the inevitable ebb and flow of market fashion (e.g., value is good over the long term, and so too are small caps; but sometimes, the market has a flight to size and/or a flight to junk).
And i know a lot of folks on SA are going to hate hearing this, given it's crowd-social leanings, but experience counts. . . just like any other profession. Hopefully, SA will curate the novices out of the premium area, but if they don't, you should. Market history repeats more often than many imagine, so I'd be leery of paying for advice from anyone who hasn't lived through a good cross section of market situations.
Ultimately, there is no silver bullet. Choosing advice is something that needs to be learned, just like choosing stocks, flying a plane, doing a hip replacement, cooking a five-star meal, auditing a set of financials, playing golf, playing piano, fixing a car, etc.. At the end of the day, investing is like anything else; no instant answers and a need for learning and practice.
"I have author's I disagree with on investing, they do not get my clicks."
Actually, you should click on authors you disagree with. There's a buyer and seller in every trade so disagreement is the natural state of affairs here. You're at a huge disagreement if you don't know what the other guys are thinking. Yesterday, I spent most of the day on stocks of interest to me going back a few years to understand WHY the high short interest got to where it did. I can disagree, but I sure as heck need to know.
You should, on the other hand, deny clicks to those who don't justify their views capably.
"Marc, what you say is true about the Ad buyers vs the readers but without content the readers find relevant, there would be no Ad buyers willing to buy. The content must find a happy medium to be successful. "
I know that. You know that. I assume most or all readers here know that.
Sadly, though, it doesn't mean ad buyers know that nor does it mean ad sales teams know that, or that they'd care and act on it even if they did figure it out. I'm amazed that business school "management" classes don't teach this, but I've found that the single most important driver of behavior in organizations is that which will make one's own role seem as important as possible (money and all else flows from that). Ad buyers and ad sales people cannot and will not define the organization in any way that allows anything to diminish the prominence of the ad transaction. The investor, who doesn't even get a seat at the conference table, doesn't stand a chance. That doesn't make it right. There's a reason why most rank and file people in a business are no less mediocre than low-level civil servants. Most people are not excellent. But it's the world we live in, and if investors don't pay for their content, it's what influences what they see.
Sorry if this sounds cynical, but I've served enough time in the ad-supported dot-com world to have seen this play out with 100% consistency.
The sadder thing is that within the ad world, the dot-com personnel tends to be less competent than most. Remember, this is the new hip area that every graduate is dying to get into. Recruiters are overwhelmed by numbers and there aren't enough track records to sort out who is good and who isn't. As the years pass, this will change. But for now, it is what it is. So what are the odds of you getting good investment content when it's brought to you this way?
Ultimately, factoring in subscription fees and investment returns, subscription content is by far that best choice for the investor. Supposedly free content is just too darn expensive (after you factor in what it can do to your brokerage accounts).
Larry, I’m not sure if you’re addressing subscription content on Seeking Alpha or subscription content in general, or both. But for what it’s worth:
While there is obviously much affection for anything offered for free, right from the start of the internet I have believed that free investment commentary is what’s dysfunctional at best. In truth, there is no such thing as free content. There’s plenty of labor and capital involved in putting content up on the net and the bills have to be paid. If the user isn’t paying, someone else is. In the case of seemingly-free investment, it’s being paid for by advertisers.
As in any profession, the provider of a service must, should and does serve the interests of the person writing the checks. So in the case of free investment content, the interests being served are those of advertisers. The well-being of the users, the investors, is irrelevant except, perhaps, to the extent some 20-something former Marketing major and now ad-buyer who may or may not be able to spell PE can figure what investors need. And I’m not kidding. I used to work for ad-supported dot-com and I can assure you this is absolutely so, and that these ad buyers have no grasp at all of what it takes to satisfy the needs of investors. I even recall a big-time strategy meeting when the chairman started by asking “Who do we serve?” Me innocent dumb-ass that I was, naively said “Investors, of course.” And oh did I get my head handed to me as I spent the next half hour being harangued for not getting it; we didn’t care about the investors. It was all about the sponsors (i.e., advertisers), who’s entire attention was fixated on how boldly they can be displayed and on how many occasions.
So Larry, if you feel you’ve been ill served by the content you’ve been getting for free, I hear you. Yes, you’ve been served horribly. And I think it’s been a problem even on Seeking Alpha. I used to write here a lot but have been pulled back out of frustration with the site’s setup that has, in effect, been most friendly toward content (some good, much bad) designed mainly to attract eyeballs. (It’s not what I really do.)
I’m not participating in the pay platform on day one (because I don’t have time to refine an offering right now), but I hope it succeeds and believe it will. Subscription services turn the tables in a huge way. Writers now can ignore the ad buyers and focus on serving investors. If their content does that, it’s an obvious win-win. If their content fails to do that, then investors will cancel subscriptions and choose others that deliver.
That’s a functional world investment commentary prepared with the sole aim of bettering the investor. That is absolutely positively not the world of free content. Based on the law of supply and demand, it necessarily is the basis of the subscription world.
Again, Larry, I completely understand your hostility to the idea of paying for Seeking Alpha content. But this is a game changer. Nobody is going to give money to an author out of affection. It’s only going to happen if the author delivers good profitable ideas. (Ultimately, expect subscription prices to be negative in that you have every right to expect that you will make in the market far more than you pay for the content and cancel if that doesn’t happen.) SA has curated this and is choosing participants they think can deliver under this new and much-better criteria. And they have financial incentive to get it right and work to improve if they don’t on day one. So I suggest you check out some free trials and get a sense of what’s being delivered. Hopefully, you’ll be pleasantly surprised. And if not, keep your credit card in your pocket until you find other authors who succeed in satisfying you, among the first group and/or among later entrants.
Watching the HLF longs and shorts continue to duke it out . . . cool . . . this may be the most entertaining spectacle since gladiators carved each other to pieces in the old roman forum. All that's missing now is for Caligula to signal thumbs up or down as to whether Ackman lives to fight on or gets executed.
:-)
"the publishers perspective they welcome any viable entrants into the E-Book business with open arms because it will diminish Amazon's leverage. "
Any publisher that thinks they'd be better off with WMT having a meaningful role in e-books should be imprisoned for felonious stupidity. But then again, seeing how over the years traditional media has consistently bludgeoned itself, perhaps there are a good number of feloniously stupid publishers out there. Wonder if Bezos has stopped laughing yet . . . .
"A competitively viable Nook would damage Amazon's competitive moat in far more extensive ways and it would also weaken their position against publishers during the inevitable next round of pricing negotiations."
What the #$^$%
Amazon has been desperate to slash prices on e-books and has been largely unsuccessful due to publishing industry resistance. So you thin Wal Mart's entry into e-books might damage AMZN. Heck, I'll bet it was Bezops who whispered into the ears of some investment bankers to get them to pitch a Nook purchase by WMT. With those avaricious supplier-abusing maniacs (How do you think WMT became WMT?) in the e-book business, watch publishers run to Bezos to rescue their industry.
And by the way, Amazon had a very viable competitor in Nook. The reason Nook became an unviable competitor is because AMZN beat the daylights out of it in the marketplace. AMZN knew something B&N never figured out -- nobody cares abou tech bloggers and PowerPoint jockeys cared about the hardware-feature bake-offs that obsessed B&N. It's always been about the on-line eco-system and customer service. If you think WMT is more likely to gear up in those areas . . . . ROFL!
Oh, and by the way, you are aware, I presume, that the dedicated nook tablet doesn't really exist. It's a brand and widget added to a Samsung Galaxy tablet which, by the way, can install the Kindle app just like other droid apps in the app store. So it's entirely possible that Amazon could sell more books on the Nook than Nook will -- unless the B&N eco-system and customer service can be better -- uh, I think we were here before. :-)
Interesting perspective but ironically, I found e-readers to be the solution, not the problem.
For me, the eye-strain issue is mainly about font size. With e-readers, I can and do adjust. With books, I’m stuck. The transition for me has been amazing. Notwithstanding use of reading glasses, traditionally, I had always assumed it would take me about three months to finish an average-length novel. Now, with Kindle, I can knock off several novels per month and no, I never studied so-called speed reading. Now, I can read as much of the weekly Economist as I want. In the past, I cancelled a hard-copy subscription because I could read very little. And it’s pretty much impossible for me to get through a feature New Yorker article in print, but it’s easy on Kindle. As a separate benefit, my wife and I decided recently to buy a new place in a hot area of Manhattan, where square footage is always at a premium. She asked what I’d do about my shelves and shelves of books; I held up my Kindle and said that was all I’d need to take to Manhattan. So in some cases, for big-time book junkies, e-reading permits even major lifestyle changes. And let’s not forget bulk. Anybody here read Atlas Shrugged? It’s a cinch with an e-reader. But if you read a physical book, you must choose between a ridiculously tiny micro font, or a gym-style workout having to hold a decent-font-size copy of that 1,000-plus tome. Ditto for many other big books.
Do I miss the feel of real books? Yeah. But this is nothing new. We’ve gone from stone carvings to majestic hand written scrolls to illuminated manuscripts to hardcovers with illustrations to bare-bones hard covers to chintzy paperbacks that quickly yellow to trade paperbacks. So evolution in the nature of reading didn’t start with e-readers and it won’t likely end there. Such is life. I also miss fountain pens. Anybody expect to give up word processing and go back to those?
Bear in mind too that e-reading comes in varied forms. The articles on eye-strain refer to computer screens, which involves back-lighting. Kindle PaperWhite and Nook Glow are front-lit e-readers, which is the ideal kind of fatigue-free reading. And in both devices, the level of lighting can be user adjusted so it’s always just perfect relative to the illumination in the environment. And both are now so cheap, they aren’t alternatives to tablets; they are additions to tablets. (And in both cases, they electronically synch with tablets and phone apps so you can easily go back and forth from one to the other.)
I’ve been a book lover since I was a kid, but I have to say I do think e-reading is the future. And I’m not so sentimental about the diminution and potential loss of B&N. Sure it’s pleasant and easy to buy books there now. But that’s because so few do. My memories of the chain’s heyday involve waiting on line to pay for sometimes as much as half an hour and occasionally, just putting down the books I planned to buy and walking out because of only one or two registers open and dozens of customers waiting. So frankly, waxing poetic about the love of going into B&N stores to buy books nowadays seems like someone talking about how much they love visiting the bedsides of comatose family because they no longer talk back at you.
And let’s not get too snippy about AMZN. AMZN won because it is flat out better. NOOK definitely had a chance to gain the upper hand (tying an e-reader to a universal book format, and a brick and mortar chain that included coffee cafes – how good is that!). But in e-reader land, the pervasive experience was magnificent customer service from AMZN versus arrogance and nastiness from B&N. It’s hard to say anything good about AMZN on Seeking Alpha because for reasons some sociologist will someday have to discern, this venue has become a hotbed for AMZN haters (as well as AAPL lovers). But the reality, backed by dollar votes of countless real-world consumers, is that AMZN doesn’t so much wreck businesses as pick up the money left by inept arrogant businesses that choose to self-destruct. Don’t let some mis-step such as Hatchette blind you to the reality.
I have no idea if the valuations posed her make sense. But if you like them and want to act, fine. But just don’t put your money on the table because of dreams of some sort of anti-AMZN backlash. In the world beyond Seeking Alpha’s cyber borders, that’s simply not going to happen.