Sunday, January 25, 2009

First Post - Why We Blog - Alpha

So why keep a blog about how to think about investing, markets, economics, macro forces, industries, securities, etc.?

Three reasons:

Write well to think well. The first reason for an investor to write well is that it forces you to think well, that is: be concise (have economy in thought); simplify (avoid too much complexity and the bounds of rationality); embrace multiplicity (know all the variations of the future and speculate on how you could be wrong); and take strong positions/forecasts within one's circle of competence (otherwise not write or invest in something outside one’s circle).

Stay disciplined and informed. What hurts great investors isn’t failure, but success. After years and the first hundred million of carry, most talented investors lose their drive and hence their edge. They don’t stay disciplined; they don’t do the necessary daily work; they spend money lavishly in their personal lives and lose respect for frugality and their investors’ capital.

Communicate ideas clearly (or just have fun). With enough labor, I hope to someday write as well as Keynes, Orwell, Vidal, and Hemingway. That would make me happy – to develop a style and write something which is read decades from now. Also, as an investor I want to inform my limited partners about how to think. While the first and main thing limited partners care about is performance, they also care about information, that is, they want to be informed. They want to understand how you’re taking risk on their behalf, with their hard-earned money. They want to understand if you’re speculating or investing. They want to know you’re still passionate about protecting and compounding capital. Ultimately writers don’t write for others, they write for themselves. We write because we like writing. We have something to say.

For context, consider George Orwell's Why I Write.

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