- Random Words: The Investing Unscripted Newsletter
- You're Not in Traffic. You are Traffic
You're Not in Traffic. You are Traffic
Everyone is a caricature on the internet. Don't let that mess up your investing.
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Jason’s Random Words
Recently, Tyler and I have been making a lot of videos about Plug Power (PLUG). Plug Power is an interesting company for me to be making lots of videos about, because it's been an absolutely terrible business for something like a quarter of a century at this point. Why in the world would I spend any time making videos about a company that, in anything like its present condition, I would never, ever want to own?
It's a very interesting story to follow, and people love stories.
Value-destructive story stocks like Plug harm a lot of people, and I like telling people that, objectively, Plug Power is a disaster of a business that most should avoid.
Inevitably, when we make videos about companies like Plug Power, the pitchforks and torches come out in the comments. And they're almost always liberally seasoned with personal insults and accusations of unethical or illegal behavior.
Younger me would have been insulted by this. However, I've come to learn that making content on the internet means people are going to disagree with you. And when they disagree with you, they're going to often say mean things about you. So I've come to view it, as my friend Ryan (you don't know Ryan) put it, you're not in traffic, you are traffic.
The comments are the internet's equivalent of shaking your fist at another driver and calling them an idiot. The difference is on the internet, your words don't just stay inside your car. People see them, and you look, well, generally like a caricature, in the same way we see other drivers as idiots, jerks, assholes, or from New Jersey. Like Jeff.
The non-investing point is that we can probably all be a little bit kinder, whether on the road or in the comments.
There's an investing part of this story, too. In one of the recent videos, we were accused of all sorts of things, including supporting or being paid by short sellers, hedge funds, and others to support whatever their shady, nefarious actions are. That we were not being objective. Why weren't we talking about all the good things that Plug was doing?
And if there's one important thing that I have learned as an investor, is when you're being engaged by someone with a diametrically opposed position on something, don't just dismiss it out of hand. Investing success is more about not getting it wrong than being right. And the best way to get it wrong is to insist that your thesis is right, and dismiss any bearish arguments without giving them the credence that they deserve.
In the case of Plug Power, I'm pretty sure I have been objective. We've observed the company burn through about $4 billion in cash on its balance sheet over the past three years or so, spending so much money so quickly it had to add a going concern notice to its SEC filings. That means it doesn't have the capital or access to it to survive the next 12 months.
The investing lesson? It's like the episode of South Park that features a character who's actually a towel. And when one of the kids in the show says he's a towel, his response is "you're a towel." Well, the kid was not a towel. He was a human boy (albeit a cartoon human boy in a show that featured a living towel who also had a pretty serious marijuana addiction. The towel, not the human boy).
That part doesn’t really have much to do with the story. It’s just funny, as well as a good reminder that you can’t reason with unreasonable people, or pot-smoking cartoon towels.
The actual lesson: Remember, as an investor, your goal is to make the most money you can from your ideas. On the surface that may sound like being right is the way to great investing returns. This is there Charlie Munger’s advice, “invert, always invert,” is the most important thing you can know.
It’s not getting it right that matters the most. It’s not getting it wrong. And that’s hard to do. We are wired for confirmation bias, not disproving our best ideas.
It’s hard admitting when you’re thesis is wrong. When you’ve made a bad decision. But as Jeff and I have both talked about, investing is humbling. If you’ve never been humbled by the market, you’re probably making mistakes and not admitting it. And that’s probably hurting your returns.
Jeff’s Random Words
Jason and I write our newsletter posts without communicating with each other about what we’re writing about. Sometimes one of us will finish first and it will inspire the other person. For example, when Jason finishes first, I am inspired to write above a 9th-grade level.
Interestingly, Jason chose to write about all the comments he’s been getting relating to Plug Power (PLUG) because I see them too. And laugh. At Jason. And Tyler.
All kidding aside, my mind was on a similar trajectory before reading what Jason wrote. Something about this week’s mailbag episode got me thinking about humility, and what it means to be someone who creates content about investing on the internet. We try to answer all kinds of questions. We’re not truly qualified to answer most of them. We’re not financial advisors. So we just talk through it, and share some of our thoughts.
I often find myself just sharing what other people smarter than me (most people) have said. I think we bring to the mailbag a decent amount of humility. I don’t think we try to act like experts. Please tell us if you disagree, and I’ll forward it to Jason.
This post is also inspired by the non-stop thirsty grind I see out there on the internet of people trying to make a living selling their thoughts on investing.
To be fair, some people want to make a living, or at least have an income stream from sharing their expertise. I may be biased, but two friends of mine, Lou Whiteman and Tyler Crowe, have newsletters (one free and one free/paid) that I think are well worth everyone’s time and money. I also need them to know I’m not complaining about them in this post because they’ll read this and give me crap. I think both Lou and Tyler do it right. They offer their (smart) insights, and do it with humility.
In general, I don’t begrudge people trying to make a buck with investing-related content. I mean, we do it through advertisements. I think what bothers me is when what is being sold loses its humility. Let’s be honest, no one knows which investments or which advice is going to turn out to be correct.
And until we have decades of hindsight, it's easy for people to tout short-term “success”. One or two good years in a row and we see online bragging about returns. And then it gets very quiet when the results are different.
As of this writing, everything Jason and I do is free. Yes, we made a little on advertising, but we don’t charge anyone anything. That could change in the future, I guess. Who knows, maybe we’ll come up with something we feel is worth asking for a little money for. But I think I can say this, we won’t ever lose our humility about this whole investing thing.