Does Good Investment Require Good Research?

[ni-co]

My two cents: Good research is necessary but not sufficient.

 

If your research results in what Michael Steinhardt calls "variant perception" then the odds may be in your favor; i.e. after having done "good research" your opinion has to be different from the consensus (which is usually reflected in the market price of a security) to really have the chance to profit from it. Most of my research goes into looking what the consensus opinion is on a company/asset etc. and usually I become interested when my view is significantly different (in either direction).

 

But, by any means, this doesn't make it a sure winner (some sadist in this thread mentioned SHLD as an example where it hasn't worked out). In my mind, it only raises the chances (i.e. risk/reward) somewhere above 50/50 – which should be enough to outperform the market in the long term.

 

From a Charly Rose interview with Steinhardt:

 

Charlie Rose: What is variant perception?

 

Michael Steinhardt: Variant perception is the effort to become sufficiently knowledgeable about whatever the subject is, that at a time to be at variance from consensus, because one of the few sure ways to make money in the market is to have a view that is off consensus and have that view turned out to be right.

 

Charlie Rose: Now is that contrarian?

 

Michael Steinhardt: That’s not enough you have to be right. A contrarian is a plus, but it’s not enough. To be a contrarian is easy, but to be contrarian and to be right in your judgement when the consensus is wrong is where you get the golden ring and it doesn’t happen that much, but when it does happen you make extraordinary amounts of money. And in order to do that you have to be intellectually advantaged. You have to go through that same routine in terms of intensity, focus and commitment and the sorts of things that makes anybody in any area I think superior.

(I stole this here)

[CorpRaider]

Didn't he make most of his returns by front running orders, analyst upgrades, and other stuff that would probably land him in federal "pound me in the ass" prison, today?  Just like Cramer.

[ni-co]

Didn't he make most of his returns by front running orders, analyst upgrades, and other stuff that would probably land him in federal "pound me in the ass" prison, today?  Just like Cramer.

 

I don't think so but you may know more than I do.

[eclecticvalue]

Didn't he make most of his returns by front running orders, analyst upgrades, and other stuff that would probably land him in federal "pound me in the ass" prison, today?  Just like Cramer.

 

You are talking about James Dinan of York Capital.

[roughlyright]

ELig,

 

  can you please post more information or links to what this strategy of using VTI and VEA?

 

  Thank you.

 

Roughlyright

[Ballinvarosig Investors]

I've been doing the investing thing for ten years now. I first started like Buffett, trying to find the tiny undiscovered needles of gold in the haystack, looking at micro/nano-caps to try and discover the cheapest stocks. I was lucky, because when I started in 2006/2007, the market was ready to go straight into the ditch and very quickly, I was able to discover cheap stocks (on my own, and through here too). A few stocks ended up going to zero, a few went nowhere, a few doubled/tripled, one or two went up 5x. It was a strategy that made money, but in hindsight, it wasn't really necessary to go sifting through so many awful companies to find a few gems. If I had just bought the best insurance company (Beazley Group), the best bank (Hingham Institution), the best conglomerate (Berkshire), the best retailer (Walmart) and a basket of long-term consumer stocks (Coke, J&J, Procter, etc.) I would have probably performed even better with about 10% of the effort.

 

I couldn't be bothered with the first strategy anymore. Too much work, too many headaches, too much stress when you could achieve superior results with less effort by just buying quality when it comes down in price.

 

What are you thoughts on Hingham?  Why's it the best bank?

I like to look at historical ROA, ROE, efficiency ratio, the non-performing loan trend, NIM, price to book, loan book growth (you don't want this too high). I didn't think it was the absolute best bank in its class, but it was in the top 5% of all banks and the cheapest I could find. Looks a little expensive these days though trading at 2x book with stalling growth.

[Mephistopheles]

Research is important but only if the right material is being researched with the right mindset.

 

Let's just take a recent example: Valeant. Apparently Bill Ackman read like a hundred thousand pages of filings for his MBIA short and it's safe to say he did something similar for Valeant. Then you have Charlie Munger who probably didn't even crack open the 10-k. But through all his years of reading about psychology, history, biographies, he's smart enough to recognize a problem from 10,000 feet away, and he did in Valeant. So now we have two people, one who probably knows more about Valeant specifically than almost any person in the world and another who is very well versed in business generally. The latter is the one who was right.

 

So you can say all the knowledge that Buffett/Munger have accumulated over their lifetimes is "good research". This is not to say that it's wrong to read a 10-k because obviously they do that too. But I'm just trying to say that it's important what you read not just if you read.

 

I think we all take pride in earning money through hard work. Easy investment decisions are not as satisfying as ones that we pour sweat and tears into. But the latter can be a sign of danger; if you need to work so hard to decide if something is the right decision, it probably isn't. It's like finding a mate - it either happens or it doesn't. If you need to work your ass off just to be attracted to someone, you're probably not meant to be.

 

As Buffett says, it's more important to look for two foot poles. We don't get rewarded for effort but for results. It probably took 5 seconds for Charlie to dismiss Valeant, and 500 hours of work for Ackman to make the investment, and he was wrong.

 

Just my humble opinion.

 

[scorpioncapital]

Research is important but only if the right material is being researched with the right mindset.

 

 

Yes! First filter is to see the big strategic picture about what to exclude from consideration before going any further. I'd say this is maybe 80% of the battle.

 

 

[Uccmal]

Research is important but only if the right material is being researched with the right mindset.

 

Let's just take a recent example: Valeant. Apparently Bill Ackman read like a hundred thousand pages of filings for his MBIA short and it's safe to say he did something similar for Valeant. Then you have Charlie Munger who probably didn't even crack open the 10-k. But through all his years of reading about psychology, history, biographies, he's smart enough to recognize a problem from 10,000 feet away, and he did in Valeant. So now we have two people, one who probably knows more about Valeant specifically than almost any person in the world and another who is very well versed in business generally. The latter is the one who was right.

 

So you can say all the knowledge that Buffett/Munger have accumulated over their lifetimes is "good research". This is not to say that it's wrong to read a 10-k because obviously they do that too. But I'm just trying to say that it's important what you read not just if you read.

 

I think we all take pride in earning money through hard work. Easy investment decisions are not as satisfying as ones that we pour sweat and tears into. But the latter can be a sign of danger; if you need to work so hard to decide if something is the right decision, it probably isn't. It's like finding a mate - it either happens or it doesn't. If you need to work your ass off just to be attracted to someone, you're probably not meant to be.

 

As Buffett says, it's more important to look for two foot poles. We don't get rewarded for effort but for results. It probably took 5 seconds for Charlie to dismiss Valeant, and 500 hours of work for Ackman to make the investment, and he was wrong.

 

Just my humble opinion.

 

+ 2

[Graham Osborn]

Research is important but only if the right material is being researched with the right mindset.

 

Let's just take a recent example: Valeant. Apparently Bill Ackman read like a hundred thousand pages of filings for his MBIA short and it's safe to say he did something similar for Valeant. Then you have Charlie Munger who probably didn't even crack open the 10-k. But through all his years of reading about psychology, history, biographies, he's smart enough to recognize a problem from 10,000 feet away, and he did in Valeant. So now we have two people, one who probably knows more about Valeant specifically than almost any person in the world and another who is very well versed in business generally. The latter is the one who was right.

 

So you can say all the knowledge that Buffett/Munger have accumulated over their lifetimes is "good research". This is not to say that it's wrong to read a 10-k because obviously they do that too. But I'm just trying to say that it's important what you read not just if you read.

 

I think we all take pride in earning money through hard work. Easy investment decisions are not as satisfying as ones that we pour sweat and tears into. But the latter can be a sign of danger; if you need to work so hard to decide if something is the right decision, it probably isn't. It's like finding a mate - it either happens or it doesn't. If you need to work your ass off just to be attracted to someone, you're probably not meant to be.

 

As Buffett says, it's more important to look for two foot poles. We don't get rewarded for effort but for results. It probably took 5 seconds for Charlie to dismiss Valeant, and 500 hours of work for Ackman to make the investment, and he was wrong.

 

Just my humble opinion.

 

I think that's a great point.  I try to remember to always use the same set of basic metrics and charts when I look at every company.  And every investment starts with an idea - not the other way around.  I believe very much that like the most revolutionary natural theories, the best investment ideas are reached through a deductive process from basic assumptions/ postulates.  This is as opposed to induction, where you come to believe a certain type of investment is good because you see many examples in the market of similar investments working.  The former makes you an independent thinker.  The latter makes you a bubble boy.  To illustrate:

 

Case 1: Last year I had a view we were at the end of a credit cycle, and so just like there were Worldcom/ Enron/ Tyco in the early 00s and Bear Stearns/ MBIA/ etc in the mid/ late 00s there should be at least a couple bad actors that would crack before the bear market.  I think I used a 5-year price return screen along with high EV/ Rev and negative tang book trend.  So based on that I decided VRX and ACT (now AGN) were the present-day Enron/ Worldcom (AGN/ PFE is strikingly reminiscent of WCOM/ S).  And I could just read a bit about the history of the two companies and see they were a reflexive pair.  I wasn't a genius - boatloads of other people knew what VRX was long before (when I saw Chanos was in I knew I was right).  (Interestingly, most people - including regulators and PFE shareholders - have totally missed AGN.  The other non-financial firm that showed up was MDT - which I'm now short).

 

Case 2: Like everyone else, Ackman made a boatload of money post 09 and he wanted to make more.  Pearson came to him with a low-risk deal on Allergan.  Ackman made money.  He got the kind of dopaminergic starburst in his brain that only a quick low-risk profit can give.  And he wanted more.  And there was Valeant sitting right there.  Why not buy some and make more?  Inductive reasoning.  Ackman is an incredibly smart guy, but even his brain has dopamine receptors.

 

The world is complex, and humans are suggestible.  If you leave your map at home and just follow the crowd, you'll go somewhere - but probably not where you intended (most people lose money).

[dabuff]

Using the First Principles Method is how Elon Musk works: http://www.businessinsider.com/elon-musk-first-principles-2015-1

 

[JBTC]

Research is important but only if the right material is being researched with the right mindset.

 

Let's just take a recent example: Valeant. Apparently Bill Ackman read like a hundred thousand pages of filings for his MBIA short and it's safe to say he did something similar for Valeant. Then you have Charlie Munger who probably didn't even crack open the 10-k. But through all his years of reading about psychology, history, biographies, he's smart enough to recognize a problem from 10,000 feet away, and he did in Valeant. So now we have two people, one who probably knows more about Valeant specifically than almost any person in the world and another who is very well versed in business generally. The latter is the one who was right.

 

So you can say all the knowledge that Buffett/Munger have accumulated over their lifetimes is "good research". This is not to say that it's wrong to read a 10-k because obviously they do that too. But I'm just trying to say that it's important what you read not just if you read.

 

I think we all take pride in earning money through hard work. Easy investment decisions are not as satisfying as ones that we pour sweat and tears into. But the latter can be a sign of danger; if you need to work so hard to decide if something is the right decision, it probably isn't. It's like finding a mate - it either happens or it doesn't. If you need to work your ass off just to be attracted to someone, you're probably not meant to be.

 

As Buffett says, it's more important to look for two foot poles. We don't get rewarded for effort but for results. It probably took 5 seconds for Charlie to dismiss Valeant, and 500 hours of work for Ackman to make the investment, and he was wrong.

 

Just my humble opinion.

 

Your general point is valid but I think some statements are not quite.

 

I would characterize reading the wrong material, or doing anything inconsequential, as doing bad research. Doing good research means you are able to come to the crux and form the right insight. Ackman did plenty wrong in Valeant which he now concedes. It's not a case of good research leading to bad outcomes (though of course it can happen).

 

You say "if you need to work so hard to decide if something is the right decision, it probably isn't." I find that hard to accept. It's possible you can still come across what you believe to be no-brainers, I think it's rare in today's market and getting rarer. When I see a "no-brainer", I first tell myself that it's probably because I know so little of the situation that I couldn't even understand the opposite view.

 

WEB has done great things for investing. But one thing he didn't do as well was to warn people not to try to become him. His statements such as "two-foot poles" have led many to think investing is easy. It may be easy for him. Munger made up for Buffett's inadequacy on this by stating more forcefully "Investing is hard; if you don't think so you are stupid."

 

I happen to appreciate WEB's approach. It is an approach of 50 years of working non-stop reading annual reports and numerous other things and hard thinking. It's approach of reading 500 pages a day. He does that even though he could simply call his CEO friends and the foremost experts in the world in any field.

 

How can anyone come up with insights without much effort and mental struggle?

 

[Uccmal]

Research is important but only if the right material is being researched with the right mindset.

 

Let's just take a recent example: Valeant. Apparently Bill Ackman read like a hundred thousand pages of filings for his MBIA short and it's safe to say he did something similar for Valeant. Then you have Charlie Munger who probably didn't even crack open the 10-k. But through all his years of reading about psychology, history, biographies, he's smart enough to recognize a problem from 10,000 feet away, and he did in Valeant. So now we have two people, one who probably knows more about Valeant specifically than almost any person in the world and another who is very well versed in business generally. The latter is the one who was right.

 

So you can say all the knowledge that Buffett/Munger have accumulated over their lifetimes is "good research". This is not to say that it's wrong to read a 10-k because obviously they do that too. But I'm just trying to say that it's important what you read not just if you read.

 

I think we all take pride in earning money through hard work. Easy investment decisions are not as satisfying as ones that we pour sweat and tears into. But the latter can be a sign of danger; if you need to work so hard to decide if something is the right decision, it probably isn't. It's like finding a mate - it either happens or it doesn't. If you need to work your ass off just to be attracted to someone, you're probably not meant to be.

 

As Buffett says, it's more important to look for two foot poles. We don't get rewarded for effort but for results. It probably took 5 seconds for Charlie to dismiss Valeant, and 500 hours of work for Ackman to make the investment, and he was wrong.

 

Just my humble opinion.

 

Your general point is valid but I think some statements are not quite.

 

I would characterize reading the wrong material, or doing anything inconsequential, as doing bad research. Doing good research means you are able to come to the crux and form the right insight. Ackman did plenty wrong in Valeant which he now concedes. It's not a case of good research leading to bad outcomes (though of course it can happen).

 

You say "if you need to work so hard to decide if something is the right decision, it probably isn't." I find that hard to accept. It's possible you can still come across what you believe to be no-brainers, I think it's rare in today's market and getting rarer. When I see a "no-brainer", I first tell myself that it's probably because I know so little of the situation that I couldn't even understand the opposite view.

 

WEB has done great things for investing. But one thing he didn't do as well was to warn people not to try to become him. His statements such as "two-foot poles" have led many to think investing is easy. It may be easy for him. Munger made up for Buffett's inadequacy on this by stating more forcefully "Investing is hard; if you don't think so you are stupid."

 

I happen to appreciate WEB's approach. It is an approach of 50 years of working non-stop reading annual reports and numerous other things and hard thinking. It's approach of reading 500 pages a day. He does than even though he could simply call his CEO friends and the foremost experts in the world in any field.

 

How can anyone come up with insights without much effort and mental struggle?

 

 

I agree that The WEB/Munger approach is cumulative.  They have developed mental models over time that prevent them, more of the time, from making bad decisions.  Reading 500 pages a day, which is unlikely, is a molecule in an Ocean of information.  Buffett and Munger, and others like them, have learned to filter out bad ideas.  Many times they filter out what might be good ideas as well. 

 

The two foot hurdle, or seven foot BB player concept is something they learned to spot.  It is a process of elimination rather than inclusion.  I dont think Buffett has ever implied it was easy.

 

I think that if you have to work too hard to convince yourself that something is good, or has some underlying attributes, then you are probably working too hard (on that idea). 

 

I also think that the idea of research as defined here is narrow.  Perhaps it needs to be redefined as '"learnings".  For example: Some of the things I have learned from years of learnings are that retailers, unless they are HD, SBux, Costco, or wmt, are usually bad stocks.  Mining companies are a wildcard. Shipping companies have one good year a decade (except Seaspan).

Turnarounds seldom turn, except Fairfax, and Apple.  Banks make money for a couple of generations and then they dont.  Consumer tech is a fickle mistress.  Any new technology is inherently hard to predict.  Utilities make money but you pay up.  Telecom is like utilities. 

 

Thats only some of my learnings, and they are the result of 20+ years of reading, and thinking.  Most of it has nothing to do with the narrow world of financial statements.  My best hits have had little to do with the actual financial statements beyond the issue of solvency, and EPS/cash flow.  If solvency is an issue I prefer to stay far away.  I have never had a hit because I spotted something on a balance sheet the market had missed. 

 

edit: for bad spelling because I dont wear my reading glasses when I should.

[Patmo]

Depends on the level of talent

 

Real example of another activity, totally unrelated to investing

I have a friend who practices like a dog and never got out of bottom 5%

I practiced like a dog and SLOWLY made it to the top 4%... of the top 1%. Once I simmered down I dropped down to maybe top 2 or 5%, and it feels like bottom 5%

I met a guy who barely ever practiced and in the short time I knew him, I saw him crush the former national champ

Then there's the world champ, who is without doubt a mix of my two friends (the good qualities about them)

 

Doing work won't hurt your chances, but you'll sacrifice other parts of your life for sure, if you have no talent it wouldn't be worth the trouble

 

Peace! 8)

 

[oddballstocks]

Depends on the level of talent

 

Real example of another activity, totally unrelated to investing

I have a friend who practices like a dog and never got out of bottom 5%

I practiced like a dog and SLOWLY made it to the top 4%... of the top 1%. Once I simmered down I dropped down to maybe top 2 or 5%, and it feels like bottom 5%

I met a guy who barely ever practiced and in the short time I knew him, I saw him crush the former national champ

Then there's the world champ, who is without doubt a mix of my two friends (the good qualities about them)

 

Doing work won't hurt your chances, but you'll sacrifice other parts of your life for sure, if you have no talent it wouldn't be worth the trouble

 

Peace! 8)

 

In what?

[JBTC]

Didn't he make most of his returns by front running orders, analyst upgrades, and other stuff that would probably land him in federal "pound me in the ass" prison, today?  Just like Cramer.

 

I think he did and this touches on an important point which I feel has not been stressed enough in this discussion.

 

Steinhardt did those things to gain an informational advantage. Without this advantage he would be a lesser legend or not a legend at all.

 

The key word to investing is edge. You need to have an edge, otherwise your results are not good.

 

There are perhaps four kinds of edges: informational, analytical, behavior, and financial.

 

Insider trading is informational.

 

WEB buying into Geico is analytical (and informational because he was able to grill Jack Byrne before his investment which no one else could have).

 

Behavioral is self-explanatory - patience, fortitude, etc.

 

Financial is when things are down and everyone is poorer, you still have money to invest but others don't.

 

Few of us have financial edge - we are just not rich enough. We try to improve behavior, but we are only human.

 

Most of the investment effort is around gaining informational and analytical edges. Without such edges which come from hard work, there can be no good investment.

 

Think about what we are doing here - reading the posts and typing away. We try to learn. We learn lots everyday, but most of them are not good enough to become a money-making insight.

 

[Jurgis]

JBTC, that's a good way to look at things.

[CorpRaider]

Didn't he make most of his returns by front running orders, analyst upgrades, and other stuff that would probably land him in federal "pound me in the ass" prison, today?  Just like Cramer.

 

I think he did and this touches on an important point which I feel has not been stressed enough in this discussion.

 

Steinhardt did those things to gain an informational advantage. Without this advantage he would be a lesser legend or not a legend at all.

 

The key word to investing is edge. You need to have an edge, otherwise your results are not good.

 

There are perhaps four kinds of edges: informational, analytical, behavior, and financial.

 

Insider trading is informational.

 

WEB buying into Geico is analytical (and informational because he was able to grill Jack Byrne before his investment which no one else could have).

 

Behavioral is self-explanatory - patience, fortitude, etc.

 

Financial is when things are down and everyone is poorer, you still have money to invest but others don't.

 

Few of us have financial edge - we are just not rich enough. We try to improve behavior, but we are only human.

 

Most of the investment effort is around gaining informational and analytical edges. Without such edges which come from hard work, there can be no good investment.

 

Think about what we are doing here - reading the posts and typing away. We try to learn. We learn lots everyday, but most of them are not good enough to become a money-making insight.

 

Good post.  I suppose bribing/pumping sell siders for information is research, but I wouldn't expect Boesky to hold forth on fundamental analysis.  Personally, I wouldn't dismiss the behavioral edge based on shared humanity, but I'm not a professional who has to field calls from investors and give quarterly and annual reports.  I think the incentives (career risk/herd safety, pressure to justify fees by activity, etc..) are what is going to drive the behavior.

 

I think the financial can be a huge deal too.  For example ensuring one has durable capital seems to be key.  Getting slammed with new funds when everything is expensive and having to sell positions based primarily on liquidity to meet withdrawals in a downturn has got to hurt performance in a major way. 

[ni-co]

Not to sidetrack this discussion but, come on guys, keep it fair. I know that he has a lot of enemies. But did he really make "most of his gains" by front-running orders? And "without this advantage he would be a lesser legend or not a legend at all"? This is the first time I hear this. In my mind he has been a legend.

 

I think – but of course I don't know – that his edge was mainly analytical. At least, this is what I gain from interviews and articles I read about him. The trade he's probably most famous for is buying treasuries in 1981. At least this one has nothing to do with front-running orders.

[rukawa]

I know I don't have an informational edge. And I think the shittiest industry analyst has a far better ability to analyze his industry than I do.

 

But I am not sure that either informational or analysis advantages are the key. I actually think most of us have too much information and are consumers of far too much analysis.

 

Quoting Graham

But I deny emphatically that because the market has all the information it needs to establish a correct price, the price it actually registers are in fact correct. Take as my example a fine company such as Avon Products. How can it make sense to say that its price of $140 was “correct” in 1973 and that its price of $32 was also “correct” in 1974? Could anything have happened -- outside of stock market psychology- to reduce the value of that enterprise by 77 per cent or nearly six billion dollars? the market may have had all the information it needed about Avon; what it has lacked is the right kind of judgement in evaluating its knowledge

 

Judgement is different than analysis. There are many analysts who know better than I do that something is cheap but they hesitate to recommend the stock because its falling in price. But even good judgement is insufficient, without execution. Quoting Buffett:

But the biggest mistake we make are mistakes of omission….the things I knew enough to do but I was sucking my thumb…I probably cost Berkshire at least 5 billion when Fannie Mae was having troubles…I did know enough to understand Fannie Mae and I blew it

[Patmo]

Depends on the level of talent

 

Real example of another activity, totally unrelated to investing

I have a friend who practices like a dog and never got out of bottom 5%

I practiced like a dog and SLOWLY made it to the top 4%... of the top 1%. Once I simmered down I dropped down to maybe top 2 or 5%, and it feels like bottom 5%

I met a guy who barely ever practiced and in the short time I knew him, I saw him crush the former national champ

Then there's the world champ, who is without doubt a mix of my two friends (the good qualities about them)

 

Doing work won't hurt your chances, but you'll sacrifice other parts of your life for sure, if you have no talent it wouldn't be worth the trouble

 

Peace! 8)

 

In what?

 

A popular competitive videogame

[PatientCheetah]

Depends on the level of talent

 

Real example of another activity, totally unrelated to investing

I have a friend who practices like a dog and never got out of bottom 5%

I practiced like a dog and SLOWLY made it to the top 4%... of the top 1%. Once I simmered down I dropped down to maybe top 2 or 5%, and it feels like bottom 5%

I met a guy who barely ever practiced and in the short time I knew him, I saw him crush the former national champ

Then there's the world champ, who is without doubt a mix of my two friends (the good qualities about them)

 

Doing work won't hurt your chances, but you'll sacrifice other parts of your life for sure, if you have no talent it wouldn't be worth the trouble

 

Peace! 8)

 

In what?

 

A popular competitive videogame

 

I am guessing starcraft lol

[PatientCheetah]

Not to sidetrack this discussion but, come on guys, keep it fair. I know that he has a lot of enemies. But did he really make "most of his gains" by front-running orders? And "without this advantage he would be a lesser legend or not a legend at all"? This is the first time I hear this. In my mind he has been a legend.

 

I think – but of course I don't know – that his edge was mainly analytical. At least, this is what I gain from interviews and articles I read about him. The trade he's probably most famous for is buying treasuries in 1981. At least this one has nothing to do with front-running orders.

 

He was also a pioneer in combining trend following with econometric/monetary liquidity analysis.

[SharperDingaan]

Research is not a substitute for experience. No industry experience = no competency in that industry. You wouldn’t hire a plumber to work on your teeth; same thing with portfolio management.

 

You get paid for application (value add), not theory. Theory you can google, but application (alpha) you have to figure out yourself; it is the ‘edge’, underlying your value proposition. Inability to apply = a plumber working on your teeth.

 

SD

 

[coc]

No industry experience = no competency in that industry.

 

Before I debate this, I want to make sure I'm clear on what you're saying (or maybe I am not), so I'll ask: Are you saying that without having worked in an industry, you cannot understand it well enough to invest in it correctly?