I recommend looking at commentators as a source of data, but doing your best to not believe anything that could reasonably be classified as an opinion rather than a fact. That includes opinions about what topics deserve attention.
This must be the biggest disagreement between us. I think I couldn’t possibly have gotten the return that I did if I had followed this advice, especially the latter part about what deserves attention. Can you say more about why you think this?
ETA: Aside from the fact that it seems to have worked in practice, my theory is that it’s easier to detect good ideas than to generate them, especially when you read/hear arguments/comments from multiple perspectives, which is often possible (e.g., multiple SeekingAlpha articles plus their comments, and analyst reports about the same stock). (The same core premise makes AI Safety via Debate plausible.)
I’m a bit unclear how to map your generate versus detect distinction onto my thoughts. Very little of what I do seems like generating ideas. I’d describe my process more as noticing possibilities / finding ideas, then evaluating them.
My experience says it’s harder to evaluate ideas than to find them. I doubt that I’m unusually good at finding ideas, so there’s something strange about our disagreement. I’ll guess it’s due to some combination of you being unusually good at evaluating ideas, and being overconfident about those evaluations.
I find new ideas mostly by looking at more companies than most other investors. That’s likely more time consuming than your approach, and sometimes feels like a mind-numbing search for a needle in a haystack. But I never exhaust the supply of new companies to look at (e.g. there are many non-US stock exchanges that I haven’t found time to look at).
My concerns with commentator opinions:
Neglected topics / ideas tend to be more profitable than ones that get adequate attention, because getting attention tends to cause stocks to be efficiently priced.
Framing effects: if I frame issues the same way as others, I’ll have some of the same biases they do.
Social pressures: commentators have more goals than just making money for their followers. It’s hard for me to avoid being influenced by that.
Here are some more specific guesses as to why you might value commentators opinions more than I do:
Your approach works a couple of years per decade, maybe when there’s a large influx of inexperienced investors, and underperforms the rest of the time. You might still be right in this case if the outperformance is high enough in the best years—I might have overweighted median years in evaluating my experience.
Something has changed to make your approach usually work better (e.g. Seeking Alpha might have made it easier to distinguish good commentators). I haven’t thought much about these issues for over a decade.
You’re unusually good at distinguishing good commentators.
This must be the biggest disagreement between us. I think I couldn’t possibly have gotten the return that I did if I had followed this advice, especially the latter part about what deserves attention. Can you say more about why you think this?
ETA: Aside from the fact that it seems to have worked in practice, my theory is that it’s easier to detect good ideas than to generate them, especially when you read/hear arguments/comments from multiple perspectives, which is often possible (e.g., multiple SeekingAlpha articles plus their comments, and analyst reports about the same stock). (The same core premise makes AI Safety via Debate plausible.)
I’m a bit unclear how to map your generate versus detect distinction onto my thoughts. Very little of what I do seems like generating ideas. I’d describe my process more as noticing possibilities / finding ideas, then evaluating them.
My experience says it’s harder to evaluate ideas than to find them. I doubt that I’m unusually good at finding ideas, so there’s something strange about our disagreement. I’ll guess it’s due to some combination of you being unusually good at evaluating ideas, and being overconfident about those evaluations.
I find new ideas mostly by looking at more companies than most other investors. That’s likely more time consuming than your approach, and sometimes feels like a mind-numbing search for a needle in a haystack. But I never exhaust the supply of new companies to look at (e.g. there are many non-US stock exchanges that I haven’t found time to look at).
My concerns with commentator opinions:
Neglected topics / ideas tend to be more profitable than ones that get adequate attention, because getting attention tends to cause stocks to be efficiently priced.
Framing effects: if I frame issues the same way as others, I’ll have some of the same biases they do.
Social pressures: commentators have more goals than just making money for their followers. It’s hard for me to avoid being influenced by that.
Here are some more specific guesses as to why you might value commentators opinions more than I do:
Your approach works a couple of years per decade, maybe when there’s a large influx of inexperienced investors, and underperforms the rest of the time. You might still be right in this case if the outperformance is high enough in the best years—I might have overweighted median years in evaluating my experience.
Something has changed to make your approach usually work better (e.g. Seeking Alpha might have made it easier to distinguish good commentators). I haven’t thought much about these issues for over a decade.
You’re unusually good at distinguishing good commentators.
You’re unusually objective at evaluating ideas.