OT Saul
I thought people would like to know how I did following his stocks (I did Saul for a while and then switched to Bear). I have done it for a full 5 years. I put in a small amount of money, and when it went way up, I sold my original investment, and just played with house money. I calculated my returns and returned 11.85% CAGR. On one hand that is great. Many people thought they had found the path to retirement at age 35 put all their money into his stocks, right about the time he lost 68.4% of his money in one year. It truly is a tragedy that people lost their life savings. However, if I had bought VOO, my return would have been 13.25% CAGR. Even though I was not doing the work of listening to conference calls, analyzing the businesses, financial statements and industries; there is so much buying and selling every month that it is a lot of work to do worse than just owning VOO. I have a good amount of my money in index tracking ETFs, I have a few newsletters that beat the market, and where I really shine, thanks in part to the mechanical investing group, is in fixed income. Preferred stocks, and close end bond funds, so I don’t feel bad about my performance.
There is no playing with house money, the very idea leads to poor decision making.
I don’t agree. A lot of the stocks recommended were not profitable, which goes against my philosophy. If they were profitable, the valuations were high. However, his method appeared to work remarkably well. When it went up a lot in value, selling my original investment seemed like a way to participate in the gains, without too much risk. What was poor decision making was putting your life savings into 6 stocks, all in the same industry, which were not profitable.
It’s all your money, there no house. Your previous experience maybe due to other bad strategies but playing with house money is adding another.
What Is the House Money Effect?
The house money effect is a theory used to explain the tendency of investors to take on greater risk when reinvesting profit earned through investing than they would when investing their savings or wages. People will often think about investment income as separate from the money they earned in other ways, which distorts their mental accounting.
I agree that is true in the general sense, but not in my case. My strategy was to follow his stocks, to see if they really worked. My money went up 5 times in value. Then it started to go down. At about 4x what I started with, I sold my original investment. My strategy did not change one bit. I followed the stocks on a monthly basis. I have been doing this for 27 years. For my equities, I do a little better than buying and holding voo. (probably not enough to justify the time spent, except I enjoy it) For my fixed income, I do much better, because I buy preferred stocks, and close end bond funds. I am actually a very cautious investor.
Also, I invested money, where I could afford for it to go to zero.
I.e., doing exactly what Saul and Bear say one shouldn’t do.
Not sure I understand the point of your post? Are you saying that Saul and Bear (et al) are frauds and making up the numbers? Are you admitting that it would be super-hard to replicate their numbers because they only post once a month? Or are you suggesting as a warning to others to not follow them blindly?
I am not saying they are a fraud. I think a lot of the great performance depended on the start date of 1/1/2017, and I started following them in 4/2019. Also, they do a lot of trading intermonth which probably has some effect. I think I can state that if you invested using their style in 4/2019, you would not have beaten VOO. Saul had almost a 70% loss in 2022, and it is hard to come back from that. Only Bear gives his cumulative results. Note that since 1/1/22, he has lost money. Since, the year is almost over, I think we can say that over the last 3 years, he has lost money.
That’s true, but realistically, of all the people who follow the board, how many listen to the conference calls, do a competitive analysis, and analyze the financial statements in great detail.
Every now and then there seems to be somebody want to warn or complain about following Saul. Does not really belong here
Everything you say is critical. First it was I am making a behavioral economic error, and now this. Do you even know why this group was formed? It was formed, because people were shouted down if they disagreed with Saul. Dreamer who founded the board has criticized Saul’s board. At no point did I impugn Saul’s character. I thought people would be interested to know how someone would have done if they followed his picks exactly for 5 years. My conclusion is that the way to use the board is basically as a screen. You get a list of stocks, and then do research into moats, financials, the industry, etc., and make your own decision. You could probably do very good if you took that approach.
Look at the Knowledge Base on the right margin.
I haven’t seen that at all. People do periodically post things which Saul has declared off topic for the board and they get told so, as is appropriate. Occasionally, but rarely, there are rude posters and they are shuffled off. But, disagree? There is quite a spectrum of opinion on the board these days.
That’s true, but when the website changed, Saul chose who could post. There is self selection bias. Before, if you had a different opinion, you were called a short seller, or a troll. That is why this board exists.
Saul always had the ability to block problem posters. He just didn’t do it very often since telling people to revise their ways caused them to either do so or go elsewhere. I don’t know why, but with the new site, they switched to people being disqualified by default. So, they started with the pool of active users and any one else had to ask to be added. And, no, it was not based on having a different opinion, it was talking about things which were off-topic for the board’s announced purpose.
I appreciate your polite approach. I have to respectfully disagree. although it could be argued this was off topic for the board. Anytime someone mentioned valuation, he got very angry. He once said that growth investing beats value investing, and I showed him statistics showing that since 1926 value investing has beaten growth investing. I went out of my way to be polite, pointing out that if someone like him, who is a great stock picker does growth investing, it will indeed beat value investing. He became absolutely enraged. He was so over-the-top that someone sent me an email apologizing for his post, and explained it was because his stocks were tanking, and everyone was on edge.
I may not post often but I know of Dreamers disputes with Saul’s board and Tinker. I know of Saul before he had a board and read it from the beginning as well as Dreamer’s board.
Sometimes there seems to be an occasional attempt to save ppl from Saul’s approach when there isn’t a need, we make our own decisions. I haven’t posted on Saul’s board since the board change over but know the posters, even met a few. But I don’t have a small concentrated portfolio and probably too many positions that would never be considered. So no point to bring it to that board
Also, sorry if that is how I came off, it wasn’t intentional. For better or worst, TMF has allowed Saul to have a moderated board; even before the change over. It just use to be an occasional removal of posters that didn’t follow the rules before where now you have to request to be added. It helps cut out the OT discussions as well as lets them focus on their style of investing and analysis.
I agree with you. The discussions are a lot better now that only certain people are allowed to post. Honestly, I have nothing intelligent to add, so not being allowed to post is probably a good thing. I understand, sometimes I come across as critical without meaning to.