Finding Real Value in a Sea of Smoke, Mirrors, & Shills
Issue #47 December 18, 2019
Today’s message will be more of a real-time rant and stream of consciousness than anything else, but I hope you will harness my intent and take a personal inventory into your current strategy, portfolio positioning, and feel more comfortable doing less or eliminating noise and frantic urgency from your day.
This post is triggered today by several hours of meetings, pitches, and interviews that I had between 8 am-1 pm back to back, but has been front of mind for the last 12 months in one-way shape or form as I continue to assess how we will redefine what is valuable and worth our time, energy, and money in 2020.
First off, I have come to the conclusion that at least 95 percent of the people I meet and deals/investments I see fall into (by innocent ignorance or malicious design) a category of smoke, mirrors, or shills. This is a fact I wish weren’t true, but has proven to be time and again (and more so than ever in 2019). At first blush, this may be disheartening or discouraging to internalize. I don’t say it here for hyperbolic impact or with malice or pessimism. I say it because for 20 years I have done nothing but place what I genuinely believed were calculated bets, and this is my quantitative experience and qualitative belief based upon personal interactions and experience.
This phenomenon of “shills everywhere” has (in my opinion) been amplified by almost 2 decades of a broken internet business model, Central banks lending near-free money, financial engineering at the Fortune 1000, and multiple generations of consumers getting faux-rich, easy at scale with an addiction to debt-based fiat monetary systems, cheap products, and a complete bastardization and expectation of luxury goods and experiences at prices made affordable through monthly payment schemes and amplified by social media influencers and FOMO (Fear of Missing Out for the “Ok Boomer” crowd).
Nonetheless, the impacts are apparent and a source of discontent for many people I meet today who feel they are stuck in a rat-race even if they have less than $50m net worth.
Shill - “One who poses as a satisfied customer or an enthusiastic gambler to dupe bystanders into participating in a swindle.” ~Merriam Webster Dictionary
I had a mentor 20 years ago tell me that as an investor or entrepreneur we are all prospectors seeking to find the “gold” and that for 6,000 years of recorded history gold has held its status as being a store of real value because it is scarce and hard to get. He would remind me in times of struggle that if gold nuggets were lying on the surface of the ground for everyone to pick up at will without tremendous effort, risk, and cost to find and excavate, then it wouldn’t be valuable. He also would remind me that regardless of if you dig and move dirt for 20 years to find one vein of gold nuggets or find a vein of gold on your first day after digging for just a few hours that “Dirt don’t count.”
I can’t think of wiser words today then one thing that we both share in common is that our “dirt moving don’t count”. Only the value we find matters. Some people get luckier than others. Some investors strike gold sooner than others. Some spend their whole lives prospecting in the wrong place and wonder if they will ever uncover real value. The problems arise when we let our frustration, greed, laziness, or circumstances try to make value out of things that aren’t as good as gold.
It will come as no surprise to you then that our entire present-day bull-market is filled with mostly fools gold and without any disrespect, it is all of our responsibility if we have participated because shilling fools gold (with or without knowledge of its real value, actively or passively through our Index Funds, etc.) as a means to enrich ourselves has been possible and highly profitable. It has also been somewhat foolish to not play in the market because the rewards for that 5-10 % of society who have participated have been real and for those who have not, wage stagnation and a decline in quality of life for the first time in generations.
Our system is our system. We should and will need to design it differently moving ahead because it has been and will prove to be completely unsustainable in the coming years, but until that time we must find the personal balance as investors and entrepreneurs in taking care of our family’s while trying not to exacerbate the problem. I know that sentence right there probably lost all the “zero-sum gamers” if I hadn’t lost you sooner, but I do believe that there are areas of great value in today’s market that just need time to be nurtured and not driven by the incessant demands of quarterly earnings.
I do believe that real prospectors deserve our attention and patience and will pay us all exponential returns if we increase our discipline to find and identify and build relationships with them.
Again today’s post is more of an open-ended question than it is anything more, but I am getting more and more clear on what deserves my attention and what does not in 2020. I also am clear that this newsletter and I will continue to resist the temptation to shill stuff to you, and that I curate the recommendations herein primarily because they feel genuinely valuable to me and are worthy of any remuneration they receive because it is disproportionate to the value they deliver. If I ever have a monetary incentive I will disclose that in advance but as of now this newsletter is a passion project with no revenue model of consequence and that is primarily because the revenue models (outside of subscriptions that are voluntarily paid by some of you on substack) that currently exist don’t resonate with me and my anti-shill stance. I thank you for investing your time and attention (which has real value) and I will continue to do my best to deliver you incremental value and insights each day. For those wondering, the things I see value in personally and pay for at present are short but include:
www.realvision.com (although the free version on youtube channel is worth more than an MBA in finance on its own in my opinion if you don’t want to spend the measly $180 per year getting full-access before you are sure.)
Things I love that are free (and that I should probably donate or financially contribute to in good faith in 2020) are:
Thanks for reading and the best news is that the 5% or less of deals to invest in, people to cultivate depth with, and products to pay attention to are more than enough to pay handsome returns sustainably and make up for the 95% of crap.
I had another mentor early on that use to reply to my statements of frustration or whining with a simple line of “Are you bragging or complaining Chris?” It would always re-center me on the fact that my feelings (although real) weren’t relevant to the game or others trying to focus on their own game.
So in both of those mentor’s honor, I encourage you today to remember that each day we each dig and sift through the dirt and that none of us want to hear or focus on how much dirt we went through to find the really valuable stuff.
DIRT-DON’T-COUNT. ~Chris