Kelly Evans: Reddit's "best ideas" conference
I had a lightbulb moment several years ago when I realized that good old-fashioned stock picking was the key to the tremendous investing success enjoyed by the likes of Buffett and Munger (married to very long-term ownership, capital reallocation, and very concentrated portfolios).
It's not to say index investing doesn't work--my 401(k) is in plain vanilla S&P index funds like anyone else's--but that stock picking can generate returns far and above that. It's just really, really hard to do it well over time, so most people end up trailing the index (especially if they're paying someone else fees to try and do so).
Anyhow, after this realization I became fascinated with how to pick the right stocks to own for the long run. You don't want to overpay, but you also don't want to pass on a huge winner just because it's currently a tad above "fair value." How do you even establish fair value? Etc., etc. This, of course, is a question the entire active investment world grapples with--which is why everybody flocked to "best ideas" conferences like Sohn, Graham & Dodd, and so on.
These events weren't traditionally open to the general public, for a host of different reasons. Presenters didn't necessarily mind press coverage, though--after all, once you think the market is wrong on a stock you like, you want to convince it to change its mind. Long story short, one of the fascinating aspects of the rise of the Reddit/Robinhood retail investor this year is the democratization of so-called "best ideas."
It's all part of the "going direct" move I wrote about yesterday. Why go through the trouble of competing to present your best ideas in a 30-minute PowerPoint at an investment conference filtered to the media and the general public the traditional way, when you could simply make your case on Medium? Like this guy did, who argues that Blackberry will outdo Bitcoin.
It's been easy to dismiss the pop in Blackberry shares lately as another goofy nostalgia play, but in fact, this is a pretty sophisticated case for why BB is undervalued as a cybersecurity play and has a market-leading position in software for today's "smart" connected vehicles. It's exactly the kind of presentation you would have paid to hear at a "best ideas" event--except now it's free, and priority access is granted to the people looking for it, instead of those who can pay, in what feels like another triumph of democratized access to information.
Savvy investors like Chamath have already figured this out--and realized they can build fan loyalty as a result from taking their investment ideas directly to the public. I expect we will see a lot more investment pros on Twitter and in reddit going forward. And why even run a hedge fund that can only raise money from high-net-worth individuals the old-fashioned (wine-and-dine) way, when you can launch a SPAC and raise capital from the general public?
Of course, once the excitement of such democratized access wears off, and the hoped-for huge rewards don't materialize across-the-board, retail investors will start to get a heck of a lot more discerning. Track records will start to speak for themselves. But in the long run, giving more people direct access to solid, value-based arguments for owning stocks like Blackberry is a very good thing.
See you at 1 p.m!
Kelly