In my first post about Nuran, I talked a lot about my internal and external environment, internal being my feelings (frustration, envy, greed), and external being my work setting, the information I expose myself to, etc.
Today I learned two new things from Guy Spier’s book.
The first one is the danger that comes with publicly sharing your current positions. I already had a feeling about this one but reading Guy’s explanation and detailed examples made me realize I’m not careful enough.
Because I want this blog to be a reflection of my journey as an investor, I only allow myself to make minor edits after the fact (e.g. grammar and orthograph) so my previous monthly updates will stay as is. But in the future, I will avoid discussing any stocks that I own. I don’t know that anyone reads my blog, but I am scared of commitment and consistency bias.
In the case of Nuran, I had posted the symbol on Twitter and that led me to meet a fellow investor (speculator?) in the stock. We exchanged from time to time, exclusively talking about this stock, upcoming news, etc. There is a non-zero probability that these exchanges have altered my behavior. Did I feel some kind of belonging or loyalty because of these chats? It doesn’t help that this fellow shareholder seemed like a good guy.
The second thing I learned today from Guy is the importance of having a checklist when buying stocks. I knew that Francis, Nuran’s CEO, had a background as a salesman. I don’t mean to say that its’s a bad thing, but it is a fact that salespeople are trained to convince you to buy what they’re selling. An example of checklist item could be: “Have you checked the CEO’s background?”. I think that having it in a formal checklist will force me not only to do that verification, but also to think about it’s implications.
Guy says that a checklist is something personal that must be tailored to your own weaknesses and biases. In my case, I have a weakness for charismatic CEOs. I think I have a knack for detecting potentially great leaders, but for sure my true positive rate is lower than what I think is and far from 100%. So that’s something I have to watch out for. Another example of checklist item could be: “Have you googled the CEO’s name?”. A few other examples: “Is the CEO one of the founders?"; “Does he own more than 5% of the company?"; “Is his salary reasonable vs the profit of the company?”.
Until next time, stay cool & stay invested!