Friday, July 17, 2009 5 comments ++[ CLICK TO COMMENT ]++

It's been two years...

This blog was started exactly 2 years ago. That doesn't seem like much but, given the amount of posts I write (some of them admittedly not so good), it seems longer to me. Due to various circumstances, I have had a lot of time to write articles. At some point, I won't have as much time to blog so I thought I would take a look at how this blog has evolved over the last 2 years.

I used to post messages, some of them really long, on various message boards and I started the blog after some people suggested it to me. There are two key benefits to me from blogging. Firstly, it makes me do research and challenges my own views. This may be time consuming but it's worth it. It is especially fitting for macro issues, which I find interesting. Secondly, it improves my writing. I haven't put as much effort into my writing (I don't even spell-check and generally don't read over my posts, except some long ones) but I hope improve that at some point. I do think that writing blog entries (or anything else for that matter) makes you think better and in a coherent manner.

Looking back, I was fortunate enough to start this blog just before the financial crisis hit. The chaos, especially in late 2007, was amazing (although not welcome to most investors who were bleeding red literally every day.) Investing in Ambac also turned everything into quite an experience, unfortunately with serious financial damage to myself.

If there is any downside, it's the fact that I haven't really uncovered many profitable opportunities. My poor record attests to how bad it has been so far. It's inexcusable for a self-professed contrarian to be posting losses when the market collapses. I'm really dissapointed that I under-estimated the scope of the credit bust, especially the real estate collapse. I can't believe Ambac turned out so badly. One of my goals, like most investors reading this, is to improve my portfolio performance, which means better ideas on this blog. I need to, as a sports athlete might say, execute better!

The Story

I lost the battle against William Ackman. In the end, William Ackman was right! I guess Martin Whitman was wrong...

The story over the last year has got to be my disastrous investment in Ambac. I hope I didn't financially hurt someone that was reading my thoughts on Ambac. Although it's up to the individual to make their decisions, it still doens't make me feel good knowing how badly my bullish case was.

Ambac is a big deal, not only because of the dollar amounts, but because it was a contrarian investment. A self-professed contrarian ending up with a huge loss in their primary strategy is painful. Long-time readers may have observed me watching housing implode and financials collapse, only to make a major mistake.

I still can't get over the fact that I under-estimated the housing bust. It is sooo obvious in hindsight; I ended up making the same mistake that others who were never bearish on housing did (I have a post on real estate coming up and to give a quick heads-up, it has to do with nominal versus real changes in home prices.)

Some Interesting Blog Stats

Once upon a time I cared about the number of hits I was getting, simply because there is nothing worse than writing something and thinking that no one even reads it. Nowadays, now that I have passed 100 regular readers, I don't care. I suspect the blog has hit a peak and won't attract many more readers. The blog is somewhat eclectic and the contrarian tilt likely turns people off. The readership will decline as we move forward because, I suspect I'm moving into small-cap and micro-cap stocks and, maybe in an year, foreign stocks. Most amateur investors tend to be interested in large-caps and mega-caps.

A lot of credit must be given to sites like Controlled Greed, who probably generated most of my initial traffic. It's quite ironic too, given how John, Controlled Greed's blogger, is a conservative and some of my articles probably drive all his conservative readers crazy :)

Anyway, here are some interesting information on this blog from Google Analytics...

The following shows the top pages based on unique visitors. The table isn't that insightful for blogs given how most people hit the main page and often don't drill down into individual pages.

The following information is about visitors...

Fun stats about country and city of origin:

My goal is to get someone to hit this page from every country on earth. There must be investors everywhere on earth right? At a minimum, there must be kids trying to teach their pet turtles to fly, right? ;)

Earlier this year, I also started using Feedburner to handle RSS feeds. It provides some rudimentary statistics and I never realized so many people use feeds these days. I never would have thought that there are as many feed readers as those who actually hit the website.

I only started tracking using FeedBurner early this year so the info is limited but in any case, here are the top 10 posts by views and by clicks:

I'm glad to see that at least a hundread people regularly check this blog. My goal is not to commercialize this blog—I do run some minimal Google Adsense ad though, which earns almost nothing--and don't care about attracting a huge readership. I would like to see more comments, since that challenges my views but maybe it will improve over time.

Some Of My Favourite Posts

There are way too many blog entries and I didn't review all of them but here are a few I particularly liked. They are not necessarily the best or something that was profitable; rather, they were some key ones that I remembered. In terms of popularity, I typically get higher hits for articles related to Warren Buffett or Martin Whitman, and the like, but I don't believe I contribute much in those cases given how nearly every other blog covers them.

Recession Signals to Watch - August 23 2007
This post won’t be useful for another 10 years, or until we get another recession… but read it and remember it for the future… we did enter a recession one quarter after Hussman made those comments… My GDP call was wrong. I was expecting lower than consesus, but positive, GDP growth of around 1% to 2%. We ended up with a contraction with a peak decline of probably -3% (4Q08 or 1Q09). The thing, though, is that you don't have to get the exact number. You just need to get the direction relative to consensus. I was quite concerned back in 4Q07 so I never invested in anything (except Ambac, and special situations).

China: It was the best of times, it was the worst of times... August 26 2007
It's pure luck but the Shanghai composite peaked roughly a month after this post. Staying bearish on China, while acknowledgine its potential to be the next big economic power, meant that I never profitted from any stock appreciation, but I also never suffered from the crash. Someone who purchased shares before 2007 is still up but, if the bubble in manufacturing and fixed assets in general is as big as I think it is, Chinese investors haven't seen their big decline yet.

Well... It Looks Like All the Monolines are Going Down - January 17 2008
As much as I disagree with his investing strategies, Synchro was right about the credit bust. There is nothing worse than making a concentrated bet on something and seeing the price fall 70% within one week after purchase. Dead on arrival, and I never knew it. I think it was Peter Lynch who said to buy falling knives after they have hit the ground and become stuck. I thought I was doing that, but I was wrong. Although I took massive losses on Ambac, it sort of prevented me from investing in anything (other than special situations). When the monolines went down, the fate of the financial system went up in the air. Very few realized it, and I certainly under-estimated it...

Historical Japanese Urban Land Prices and a note on Suruga - February 20 2008
One of my major research pieces on Japanese real estate bust... the early part about Surgua is kind of funny and pathetic. It turned out to be a front for the Japanese organized criminals. This shows the pitfalls for those looking at small-caps and microcaps or companies that seem too good to be true. I never came close to investing in Suruga (I wasn't bullish on Japanese real estate yet) but I did follow it for a while.

Is oil in a bubble? June 17 2008
Pure fluke but this was written one month before oil peaked. I wasn't confident with my bearish oil call and, unfortunately, I may have prevented ContrarianDutch from shorting oil. The crashing part came true, although my view hasn't really been tested. Some oil bulls still argue that irrational selling due to the financial crisis drove down prices last year, and that oil really should be $140+ right now. But I think my bearish view on oil will be tested once and for all very soon. We don't have any financial panic right now so we'll see if oil declines based on fundamentals. My view is that oil is going to collapse spectacularly again (hard to say when but I'm thinking within 2 years.) The rise in oil over the last 6 months is starting to choke the economy and the Street still hasn't factored in such a negative impact on the economy. This is something that oil bulls never discuss. That is, if oil rose a lot, say to $150 to $200 as some expect, what will the impact be on the economy? Practically everyone would say that it would be severe. In fact, as I argued last year, some poor countries like China and India, who subsidize oil, will literally go bankrupt (or they will remove their subsidies, which is politically difficult). So, even if you were bullish on oil, there has to be some limit. Maybe I think the limit is $50 whereas another thinks it is $150. That's fine; but the bulls need to address the point. So far, I have never seen anyone say what will happen to economies if oil went up a lot.

Does It Make Sense To Buy Stocks That Have Fallen Off A Cliff? - June 22 2008
Controversial topic and I'm still unsure. You can lose everything with stocks that have collapsed but that's one of the strategies I'm pursuing.

China: GDP vs Stock Market Return - September 3 2008
Stock market does not follow GDP performance... this time the example is China...

Secular stock market cycles & Ten year rolling returns - February 25, 2009
I find these very useful to analyze...the bottom chart showing rolling 10 year returns broken down by dividend yield, EPS growth, P/E expansion/contraction, is quite insightful .


5 Response to It's been two years...

July 18, 2009 at 7:03 AM

The thing I like about your blog is not especially your great experience or expertise, since you have no great claim on these things.  The thing I like is your wide-ranging curiousity, as well as your complete disdain for conventional wisdom.  You are as likely as not to disagree with the crowd, and this makes your writing interesting.

As far as our investment performance, we should both be happy with beating the market.  Only lucky market-timers and short-sellers have completely avoided the recent carnage.

July 18, 2009 at 1:23 PM

I hate to stop being juvenile.  But I will temporarily (for this post) stop my mocking and offer some unsolicited advice.

The only reason I stop having an adult conversation w/ you is not that you disagree with me.  It is the fact that from the very onset, it is obvious you hear but do not listen.  You read (incredibly widely) but do not learn.    You waste a lot of time trolling the web for information, thinking they offer insightsm where there can't possibly be.   You confuse macroeconomic insights and understanding  w/ MAKING MONEY.   You are constantly looking at the past ("fundementals"), and guessing at the future (macroeconomic prognostications), but ignoring the present.

 As a young man, you astounds me how during your learning phase you are so quickly to close off avenues to possibilities in terms of investing techniques.  It is tragi-comic.

YOu can take what I say as brutally hontest advice that may ultimately do you some good, or you can offer up some lame defense of yourself and "disagree" w/ me again.  I don't really care -- except that you made EVERY SINGLE MISTAKE I MADE WHEN I STARTED OUT.   The difference between me and you, is that I eventually figured out what went wrong /w my thinking and approach.

You are still oblvious.

If you want to change, go back and re-read my comment posts which at the time when I was still taking you seriously.

Good luck.

Daniel M. Ryan
July 18, 2009 at 1:43 PM

Once you've been through your first bear market, you're never the same...

July 18, 2009 at 11:02 PM

Hey, I do consider everything you say. Otherwise I wouldn't respond to you and you probably wouldn't be reading this blog either. But your juvenile posts don't help anyone. In fact, it turns me off and I doubt anyone else takes you seriously either.

I did take you seriously until you sort of gave up and went with the lame attacks and shooting down everyone, not just me but well-respected investors. It's really hard for me to accept your trashing of someone like Martin Whitman or Bill Miller. I'm not sure what your thoughts are of Warren Buffett but I imagine your views are similar on him, given how he hasn't done too well in the last year either.

It's ok for you to question their methods and disagree with them. But what is your record? What have you done for the last 20 years? You may not like my behaviour but I think you don't realize that you haven't found success either (although I have no idea how you are performing.)

Just to end off this note, I think we both agree on one core aspect of investing that we discussed. Namely, it is a really tough business and very few will succeed. I don't have what it takes to be an entrepreneur but this is as close to starting a business as I come...

July 19, 2009 at 1:08 AM

Sivaram, this, is not about me.  What's past is past.  I've said what's to be said about YMM and Whitman.

The best thing you can do, IMO, is to stop wasting time blogging.  Stop dribbling your life away trolling the economic and finance blogs.  Learn a marketable skill that will earn you a good wage.  Find a woman that gives you companionship.  Go out and smell the real horseshit, not the virtual one. 

Once you get a good job, save some money in the bank.  Once you get some money saved up from wages, then take a fresh look at the investment scene.  YOu may be doomed to repeat the same mistakes again, but at least you will earn the agony of having something substantially, and then losing it all -- that's a kind of life experience worth having early in your life.

I've already told you all I've learned in past comments.  If you can't accept what I've said before I stopped taking your seriously, then I"m of no help go forward either.

Good luck.

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