Investing voodoo exposed

As a follow-up to my pre-conference post on Stocktoberfest 2014, I wanted to relay a few thoughts after spending a few days down in Coronado with some of the brightest financial tech entrepreneurs and brightest public/private market investors. It won’t be as great as Josh Brown’s 20 key takeaways list, but worth the read just the same.

I had the pleasure of attending the Stocktwit’s Stocktoberfest conference for the second year in a row. After a little apprehension of whether I should attend the second year or not, I decided that I had made enough great friends from the first year that it was worth buying a ticket. After I arrived though, everything really changed for me. I met everyone this year, I met all the people in the investing space that are innovating and doing interesting things. Investors, content creators, people building platforms, even innovative brokers like etrade & TD Ameritrade, and so on. I was so excited to meet the Robinhood team, the team over at DataFox, and even Semil Shah. Of all three, my money is on DataFox. I’d probably join them if they offered me a job today. My friend Greg Neufeld from ValueStream Labs mentioned to me that half the companies they work with at Valuestream don’t even know how valuable their companies are and I honestly believe that DataFox would fall into that pool. What they’re doing is applicable to all investment asset classes, yet they only have one asset class built right now, and they’ve only built the smallest asset class at that. I’d invest or join the team today if they asked.

Some of my other highlights? Well honestly there are way too many to talk about. I felt like I spent a week in Coronado with the brightest people in finance and financial tech. In reality I was there for three days. Yet I had an incredible conversation with Tom Brakke about investing in public and private markets, due diligence, the problems with the limited lives of funds, and where investing styles of public and private investors intersect. This really solidifies a lot of my thinking and I hope validated some of the incredible insights that Tom shared with me on due diligence. I literally have a new framework for due diligence after this wonderful conversation.

I had the amazing opportunity to talk with Richard Swart. Richard is the academic advisor to pretty much anyone that matters in crowdfunding. He is at Berkley and advises the World Bank, the SEC, and so on. You name it, Richard is involved in it when it comes to crowdfunding. Of course crowdfunding has many different forms and I’ve been talking about it here as well as in my monthly article that goes out to the largest group of real estate investors west of the Mississippi. The incredible insights for me from Richard were around who is truly funding the P2P lending market, what that means for other loan based markets that non-banks are creating, and what that implies for other non-bank investment vehicles. The simplest form of the insight (without going into the depths of our conversation) is that the public/retail investor is on the facade of these new institutions, but the doors in and out of the institutions are primarily trafficked by other institutions.

Another really great session for me was my friend, JC Parets explaining what technical analysis really is. I actually wish that he’d talk more about this concept. Personally, I’m a value investor. I don’t invest based on technical indicators. At the same time, I’ve studied economics and I understand what it means to look at a chart of supply and demand and try to understand what it means. At the end of the day, that is all technical analysts are doing. All those patterns that they look at are patterns of human behavior and not patterns of value or progress that a company is making. Too many people are critical of those technical analysts because they don’t understand this simple concept. Even though I don’t invest based on these triggers, I completely understand how these factors will play into my own investments. After all, it is this human behavior that ultimately makes ANY investment gain or lose value. There is NOTHING else that makes a stock move except for humans buying and selling the stocks.

Semil Shah, a guy I know from the startup/early stage investment community also impressed me. He boldy stepped out in front of this audience of stock investors and put forth a thesis on investing in public entities based on his experience with private companies. I don’t totally agree with his thesis, but I am impressed by his willingness to have a thoughtful conversation about it and accept all levels of feedback. I sit on the sidelines too much and quietly execute on my thesis. I really think I would be better off if I was bold enough to talk about it more publicly like Semil. I’m really excited to have more conversations about private market investments at future conferences with Semil.

One of my favorite things was the networking dinner. I spent the evening with three other people and really had a great time. I got to have a long (2-3hr) dinner with Todd Sullivan, Bob Alkana, and Bob’s wife. We talked about investing, real estate, politics, the economy, and of course the merits of investing conferences. Todd is one of my favorite stock researchers, his opinion about the market matches mine, and he has been able to dedicate his working life to the exercise of finding and investing in the greatest companies. As a result I’m invested in many of the companies he’s invested in. Bob built Malibu boats from the ground up, if you’ve ever been out on a lake boating, you’ve probably seen his Malibu boats. Bob and his wife have been out of the business for a little while and now invest alongside Todd like I do. Bob and his wife also invest in a lot of real estate like I do. They have an incredible amount of real estate in central California and have an incredible investment thesis around it. I am really excited to see the conversations about buying equity in companies for the long term increase at the stocktwits conferences.

I had a few brief encounters that were great as well. I had a brief conversation with Eddy Elfenbein, despite being shocked at his height (which is the opposite of Andy Swan of Likefolio), I was impressed with him more in person than I have been online. In person Eddy is more humble, funnier, and more insightful. Like I said, I didn’t think that would be possible after having followed his blog, email list, and market insights for a few years now. Josh Brown and I spoke briefly and I met his wife. It was great that he was so much more participatory in the presentations this year as he is really a funny guy who knows finance. I finally got to meet Phil Pearlman who works over at Yahoo Finance. He’s actually really funny and can relate the psychological interactions with the markets in a way that I’ve never heard before. I had the pleasure of meeting Ian from MarketWatch, (impressed), Kyle & Jason at Benzinga (impressed), Joanna Bell (impressed), Bill Gurtin (are you fucking kidding me, this guy is brilliant), Jack Schwager of FundSeeder (I was impressed before, but now….more impressed), and of course I was re-impressed with Motif Investing and really think Hardeep over there is on to something huge. There are way too many other interesting companies and investors that I met to really name them all.

Despite all of these incredible things, I think Howard and the stocktwits team is just scratching the surface of these conferences. This is really the cutting edge of modern finance unfolding before the eyes of all the attendees. Many attendees on the night before the show starts are looking each other in the eye and saying things like, “I don’t know why I’m here, but I’m trusting Howard”, or things like, “I sure hope I get a client out of this”. By the end of day two of the conference they’re all saying things like, “holy crap, did you see XYZ, I can’t believe what they’re doing and can’t wait to work with them going forward”, or things like, “I didn’t know we’d come this far in this space”. These are real indicators that the conference is bringing the best of the best from all of the fringes of Howard and the stocktwits team’s networks and weaving them together into a comprehensive story of modern finance. Could they use a little more organization and polish, sure. Could they support a much broader audience that doesn’t currently know about their value, definitely. A little more sponsor dollars into the coffers, a venue that will support more people, and a deeper engagement with thought leaders and experienced conference organizers is all sure to come and make the stocktwits network and the stocktwits conference the recognized leading indicator finance and financial tech in over the next several years.

What were some of the favorite companies that presenters talked about? Todd Sullivan is bullish on Howard Hughes Corporation (HHC), Cole Wilcox of Longboard Asset Management is bullish on Microsoft Corporation (MSFT), Howard Lindzon is still bullish Apple (AAPL), Google (GOOGL), & Nike (NKE), and Semil is bullish on AirBNB.