Over the course of this past year, I have had the opportunity to work with Samir Patel on a number of writing projects for Seeking Alpha. He is a great editor, investor, and friend. I am grateful for the time that he has spent on my various articles. I am in admiration of his many talents. Mostly, I look forward to continuing our friendship and collaboration in his new role.
BS Exit Interview Question #1: What are you going to miss most about SA and how frequently will you read or write for SA in the future?
I plan to use SA quite frequently! RTAs, articles, market currents, SA Pro… they're all very useful products for investors. I'd love to continue contributing and commenting and certainly plan to do so to the extent that my future employer(s) will allow. And - it's going to sound cliché - but what I'm going to miss most about SA is the people. Our contributors are great. Of course, the SA Pro team has some truly special people and I'll always have very fond recollections of my first "boss" (Rachael, I love you, in a way that's not in violation of workplace harassment laws. You were an awesome mentor and manager.) Nonetheless, I plan to keep in touch with all my editor/contributor friends - as I've told all my coworkers, this is not the end of my SA journey.
BS Exit Interview Question #2: What are you most looking forward to in your next step in your career? Blah blah blah…
The principal of the hedge fund I'm joining is absolutely brilliant; he has a very unique style of investing and an extraordinarily impressive track record. I think he'll be a great professional as well as personal mentor and I look forward to learning a ton and refining my own investing style based on his experience and guidance. I'm at the point in my 'investing career' where I have some intrinsic talent, some theoretical knowledge, but only limited practical experience as an investor; this next step as a hedge fund analyst will allow me to exponentially improve that third item (as well as the first two).
Debunking: What, in your opinion, is taken seriously by investors but is actually completely bunk and must be debunked by you here and now?
First, a brief caveat here: my experience is obviously limited compared to many professional investors, so I don't believe that I have everything markets-related figured out. I'm fully aware that I don't know everything. That being said, I think most investors define risk the wrong way. I think volatility and betas are terrible (perhaps even useless) measures of risk. As another example, many think it's risky to put money into a stock that has an ugly chart - I can't tell you how many times I've pitched ideas to people, and they've responded with "but that stock is dead money". What's happened over the past five years may have a lot, a little, or no relevance to what's happening today and tomorrow, and investing is by nature forward-looking. Further, a lot of "unsexy" businesses may not grow at ten trillion percent per year, but they often trade at equally unsexy valuations and thus provide the opportunity for substantially above-market concerns. Etcetera. Risk is always and everywhere a function of price.
Recriminations: Thank God that's over! Who or what did you have to deal with on a regular basis - a stock or person or topic - that drove you crazy but you couldn't do or say anything about until right now?
Quite honestly, I truly enjoyed my time with SA and have no major complaints. Your question phrasing makes this sound like a bigger deal than it really is, but I guess from an editor's standpoint, it's a little frustrating when contributors (or commenters) are absolutely convinced that they know 100% of the story and there's absolutely nothing to learn from anyone else. Many times, people become too emotionally attached to their positions and don't see that when they're receiving feedback (whether from editors or readers), it's not a personal insult, but rather a helpful suggestion from a different perspective. SA is very adamant about having no in-house opinion; all feedback we provide is simply an attempt to help the contributor in question communicate their point more clearly to readers, so it can occasionally be frustrating when contributors email us (or post on the forums) accusing us of trying to suppress their viewpoint or hurt their feelings. That's not at all what we're trying to do - we're just trying to provide our readers with consistently high-quality, well thought out analysis on all stocks from all perspectives. Especially for our professional-level products, that requires us to apply editorial criteria to ensure a positive user experience. We don't like declining articles any more than you enjoy receiving such a note - but it's necessary for SA to continue to be the top source of financial analysis on the web. Having an outside, uninterested, objective third party point out "but you're assuming XYZ - why's that?" can often be helpful in refining your investment thesis or presentation thereof.
Texas: What exactly happens if one messes with Texas?
I could tell you, but… well, you know. Since I'm not allowed to answer that due to the Texan code, if you'll permit me a rearrangement, I can tell you what happens if one raises taxes: it's bad and disincentivizes business, and consequently job creation and societal progress.
Advice? Please drop some knowledge on us in case we never hear from you again:
Just one long:
INTC (would've used GPT but I stole that one from you and can't claim it as an original idea.)
Just one short:
None that I can think of. I don't really short much; I occasionally buy a long-dated put or two on overvalued momo stocks as a (very tiny) hedge against broader market downturns, but my long exposure is typically 98-100% excluding cash.
Just one book:
Atlas Shrugged, obviously.
Just one joke:
Is it bad that I can't think of any that are South Park references and likely not appropriate for publication? Awkward. Okay, I'll steal one from Vince Martin. What did the fish say when it ran into a wall? "Dam."
Alternatives: For the sake of brevity, I think that we can all assume that you will achieve fame and fortune but fast forward a few years and imagine, if you will, that the door flies off its hinges and it is the Feds and they are willing to settle for no time or penalties. Your good name will remain intact. The only condition is getting debarred from ever investing in a public company again. What would you do as an alternative career?
What? I don't understand. Why would the Feds come after me??? :'( I'm a nice person! I love puppies and am kind to old ladies and lost children and confused tourists in Dallas, or at least I would be if any tourists ever came to Dallas. More seriously, besides investing, I'm really interested in business strategy and would thoroughly enjoy a career in corporate strategy or management consulting. I'm also an amateur novelist, and joke with people that someday I'll retire and sit around drinking mochas and writing stories. If I could figure out how to make money by hiking in remote areas and taking pictures of nice landscapes, I would do that too.
Capitalism: How optimistic are you about the future of free market capitalism? Or is it hopeless?
Call me a hopeless optimist, but I believe that the future is fine. Empirical data and history prove beyond a shadow of a doubt that free market capitalism (with limited and sensible regulation to reduce negative externalities) is the path to prosperity for all humanity. It's what allows the common man today to maintain a much, much higher standard of living than the common man in feudal or prehistoric times. Simply put, people respond to incentives, and a free market incentivizes them to create value - if you're making a profit, it means you're selling something that's worth more to your customers than they pay you for it; it means you're creating wealth and improving quality of life. There will often (always?) be misguided uprisings of populist sentiment, but ultimately, the injurious effects of bad policy will be recognized and result in a return to smarter policy. As my ever-wise former college roommate Travis put it, politics is a bit like a pendulum - when it swings too far one way, it'll eventually swing back the other way, and on average it'll be in the middle. Hopefully that middle is a free-market economy with limited regulation to prevent negative externalities.
Rand: You've obviously read and you've thought a lot about Ayn Rand and objectivism. Are we capable of learning the lessons of central planning and state control of our economy in theory, through understanding human nature and our history? Or, do we need to personally live through every lesson again in order to learn?
When the competition judging period is over, feel free to share my Atlas Shrugged essay… until then, I believe that, to some degree, you need some real-world experience to understand how the world operates. A little bit like you couldn't perform open-heart surgery just because you've read about it, you can't really understand how an economy functions until you've actually participated in it. I am ashamed to admit that for a very brief time in my early teenage years, I was sucked into a few bizarrely irrational populist lines of thought (ex. executive pay should be capped, capital gains tax rates should be set equal to income tax rates). Obviously, real experience in the workforce (and hands-on visibility into how people respond to various incentives) showed me the error of my previous thinking; this experience combined with reading and a more mature and pragmatic (as opposed to idealistic) view of the world formed the basis for my close-to-Randian view of markets, government policy, and wealth creation. Things like socialism sound great in theory when you're ten - the rich have so much money, why not just give it to the poor? - but when you get out into the real world and start understanding incentives and the broader issue of societal progress vs. static redistribution (Eat People and Unintended Consequences by Andy Kessler and Edward Conard respectively are great looks at these), you realize that things that sound great in theory often utterly fail in practice. So ultimately, I think you do need some experience to fully understand, and I also think it's natural to be a little idealistic when you're a kid and more realistic/pragmatic when you grow up… but at the same time, it would undoubtedly benefit our world if we could reduce the prevalence/acceptance of some very flawed lines of thought that are omnipresent in modern society.
Millennials. Kids these days. Walking on my lawn, their music, and have you seen what they wear? Argh. You seem like a constant source of common sense. So what the hell is wrong with more or less everyone else your age?
Yeah, what's this Dubstep stuff? I don't understanddddd. It's not music, it's noise! Bring back pop punk! So yeah, I rant about Millennials all the time. As much as I'd like to say that it's just a reoccurrence of the long-existing "kids these days" phenomenon, I think there is something truly different (in a bad way) about the current generation. For example, there was this PwC study a while back which concluded that Millennials aren't willing to work longer hours early in their lives even if it leads to career advancement and more success. Other studies (and general knowledge) reveal very disturbing trends like Millennials not realizing the value of things like hard work, money, career success, etc. Without being too reductionistic, I think this is possibly a result of "everyone-gets-a-trophy" parenting (thankfully my parents did not take this approach) and a broader social attitude that money is bad. This is obviously patently false - without repeating my entire Atlas Shrugged essay here, supply chain surplus is divided into profits and consumer surplus; consequently, making money generally means you've added value to the world. The more money made, the more value added. Although there are other ways to add value that don't have an immediate monetary payoff (ex. raising your kids well), the point is that people who make a lot of money generally do important things and help keep the world functioning and improving. It's currently socially frowned upon to say things like this.) There are many other issues as well (ex. I think twitter and texting have reduced the current generation's ability, broadly speaking, to carry on deep/important conversations that require an attention span longer than six seconds) but I'll save the rest of it for a book about achieving career success that I'm working on with my friend/mentor Austin. Stay tuned.
India: What do you think about the future of India and Raghuram Rajan's new tenure as Reserve Bank of India governor? (Inside joke alert: Samir has only a distant hereditary connection to India, but still manages to get totally out of context questions about India/Indians, so I thought I'd close with that).
Honestly, I'm unfamiliar with the Indian economy and politics beyond commonly-known facts and some random specifics related to Vodafone and their ongoing "conversations" with Indian authorities. I suppose I'll learn more about it if/when I invest in Indian companies and/or companies that do substantial business there. I could probably tell you a few things about the Texas economy, though… and I think the future for my Texas flag tie is that it will soon have many Texas-themed companions on my tie rack. Have I now fully established that I was born in raised in Dallas and consider "Texan" to be a valid ethnicity to put on my census response and job applications? Yeah? Okay, I'll quit now.
Don't quit now! Thank you, Samir, for taking the time to submit to this grilling. In addition, I have benefitted from reading your novel, your essay on Ayn Rand, and your refreshing and brilliant thinking on multiculturalism and political correctness. Were you representative, I would feel much more confident in the future of capitalism and in the Millenials. Happily, you actually are representative of Texas. Proving that I value this friendship more than I value my ego, I am actually looking forward to our Scrabble game Friday and am unfazed by my opposition research team's report that apparently, among other things, you are a famous spelling bee champ.