This post’s title is a wink at the book “Being Right or Making Money” (never read the book, yet like the title).
It is important, yet hard to draw correct investment lessons from experience.
I think I recently found a personal bias in the last few years. I unduly focused on finding investments with *multiple* *interesting* thesis points.
Take GOOG as a counter point. For the vast majority of time, GOOG has been an analyst’s favorite, with “buys” outnumbering “sells” by a wide margin.
Yet GOOG holders are making money hand over fist time and time again.
I believe the main investment thesis on GOOG hasn’t changed much since IPO. The main thesis point is simply the “positive feedback loop”, i.e. better AI algorithms draw in more users. Users generate useful feedback to improve those same algorithms. Rinse, repeat. In my opinion, GOOG has always been the AI and large datasets company.
I have followed GOOG for a long time. It was the first company I wanted to buy as a young engineering student (my father stopped me) after reading “The Google Story”.
Once I gained control over my savings, I always felt I did not have an edge vs consensus. Everything I know about the company is public knowledge. Most insights are scattered around.
There is nothing interesting for me to write on GOOG, everything interesting has already been written by greater investors and greater writers!
Is it possible the edge here is to understand the “positive feedback loop” thesis point, given the AI dynamic, is not “very, very important”, but instead very, very, very, very, very, very, very* important?
Assigning outsized weights to thesis points does not make for very interesting blog posts.
The above lesson was largely learned by having worked for a great portfolio manager who fostered the ability, I believe, to spot super important thesis points.
Let me know what you think.
I believe FB is in the same boat (biggest network reinforced by AI = unprecedented). There might be a larger binary risk involved, but on a risk adjusted basis the low valuation seems compelling.
Disclosure: Long GOOG, FB.
*aka high conviction on super durable long runway growth. Is this what John Huber means when he wrote on Facebook “the best business model ever created”.
As I’ve outlined before, there is no informational edge in most large-cap stocks, but there absolutely
is a time-horizon edge for those who are willing to thoughtfully analyze what most people want to
avoid out of fear of what the next year might look like.
I guess great investors who sometimes write 1 pager theses, like Mr. Huber, are telling us to focus on their thesis points as being “very, very, very, very, very, very, very important”.