The Benefits of Writing
I saw how a few friends in the investment profession lately shared essays explaining why they write. I really enjoyed reading them, and their observations rhyme with my experience.
Frederik Gieschen wrote: “Sometimes it feels like writing saved my life.” Our mutual friend, Tom Morgan, has penned many incredible pieces about curiosity, luck, and knowledge. David Senra from Founders Podcast recently shared how Charlie Munger tells us that humans have been writing down their best ideas for 5,000 years; read them! David Perell’s motto is: “Write every day,” he emphasized, “If you want to stand out, start writing.”
I have reasons to believe that they are on to something!
I think that some of the best writing is done for yourself, to yourself. It’s a process where I collect my thoughts, ideas, and observations around a singular topic and see where it takes me. There is this great advice for new investors to write a page or at least a full paragraph explaining why they would buy a stock.
The first role that this writing plays is to actually see if you have reasons that are good enough to invest. The second benefit is focused on keeping the conviction. There will be many moments when the best-researched investment will test our patience. Looking at that page with all the reasons why it makes sense to own it can help a lot. Finally, that note can serve us well when we look back at an investment and compare it to where we are today. It’s a moment of retrospection or a post-mortem – has the investment done what we thought we would?
All those three elements have a huge value when investing. I actually can’t imagine investing without writing. Vitaliy Kastenelson, a fellow value investor and author, says: “I’m an investor who thinks through writing – that is why I write.”
I can relate to that. The minute something is written down, it looks different; it has a new importance.
I like to write daily, and if some of it is worth sharing, it gets rewritten a few times, sometimes it waits to be published, and sometimes I share it sooner.
As an investor, writing is an integral part of thinking, and no investor can work without thinking. I don’t count on my memory to retrieve all the details of a particular business I researched; I rely on the notes I made at the time.
Writing is a perfect test for ideas. Peter Lynch famously said, “if you don’t understand a company, if you can’t explain it to a 10-year-old in 2 minutes or less, don’t own it.”
When described and explained, ideas are subject to an ultimate test. Does this make sense to anyone but me? That’s a peculiar place to be, though, that goes beyond getting all the facts and figures.
From my experience presenting investment ideas to audiences over the years, I remember well that stocks that everyone agreed on turned out to be not as great, while the ones many felt very uncomfortable with did better.
It’s just an anecdote and a memory, but there is something to it. After an investment meeting, someone looking in would ask me what this heated discussion was about. Then, I knew I was onto something.
Contrarian ideas, by definition, have a bigger potential room for improvement. A down, cheap, out-of-favor stock can surprise on the upside over the next few years. If that were to happen, the price would go up, the valuation would expand, and maybe it would be in favor all over again. The delta, the change, can be more pronounced than for a stock that everyone loves.
All investors I know read, most write, and some publish. There is something special and vulnerable about sharing your writing with the world, maybe even frightening. I know many fellow investors who privately write fascinating pieces, yet a bigger audience has yet to see them. I understand and respect that. I still think it’s absolutely worth it. Writing has made me a better thinker, and better thinking has helped my investing and life in general. Investing is just one incredible laboratory to test your ideas, but so many even bigger ideas can be put to practice outside of investing.
There is that initial feeling of unease every time I hit “publish,” it has never gone away. Beyond that uncomfortable yet exciting feeling, I couldn’t be more grateful for all the incredible friendships and kindness my essays and books received over the years. The payoff has been more karmic than monetary, but isn’t it what counts the most? Thank you!
Happy Investing!
Bogumil Baranowski
Published: 10/12/2023
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