Dan Sweet

I am not good at trading. I try to be honest with myself, admit that, and avoid trading. However, in our Jim Cramer/Fast Money era it seems like you are leaving money on the table if you don’t have at least a couple positions on at all times.

Here is a summary of my trades of the last 4 years or so.

Trade #1 (Winner) – Buy Gold via CEF with gold at $600 back in 2008ish? Sell at $1000+ and rebuy at $900. Just sold again at $1500+ last week. 2.5x

Trade #2 (Winner) – Close all positions with market at roughly 11,000 in fall 2008 when I see on C-SPAN that Congress isn’t going to pass first TARP bill. I look like a hero as market falls to 6,000ish. Avoid getting cut in half.

No Trade #2.5 (Loser) – I never rebuy. Buffett say its time to buy, I see 4,000 around the corner and take a pass. Market now at 12,000+ and all of a sudden Trade #2 doesn’t look so great. Miss an easy double.

Trade #3 (Loser) – Try to make money shorting commercial real estate over a long period of time using a short term structured ETF. Very bad idea, lose lots of money. I suck at trading. I’m reminded yet again to not even play if you aren’t going to put the work in. Lose 75% of position.

Trade #4 (Winner) – Buy SLV at $13.89. Sell last week at $45ish. 3x

Net – I’m basically completely flat over those 4 years. Basically on par with the market.

I’m completely in cash now but want to get back in and “set it and forget it.”

Current shopping list looks like this:
Buy AAPL
Buy GOOG
Buy CEF (Canadian gold trust)

This passes the Warren Buffett test where hypothetically the market closes tomorrow for 10 years. I’d feel just fine owning these three. Keep it simple.

Particularly, smart people who are involved in high tech, working at or investing in startups, live in the Bay Area/NYC/Boston, are academics, run VC funds, are former founders, or early Google or Facebook employees, or work at Twitter or Foursquare.  At least that is what it is for me.  The people, questions, or topics you follow (by clicking the “Follow” button), the answers you up or downvote, and the threads you read and comment on determine what it is for you.  I’ve invited friends to join Quora and been surprised to find that for them Quora is all about, China, Latin America, greentech, or the Los Angeles Lakers.

Check out my Quora profile to see what it has been for me recently.

I’m an information junkie and always want to understand the “why”.  This is why I ended up with an economics degree, it promised explanations to questions like why airplane tickets are priced the way they are.  Quora is fun because you often get great answers from people with real domain experience.  With the best answers upvoted and answers from more prominent contributors appearing higher than answers from nobody’s you spend very little time reading non value-added comments.

If you enjoy learning things you really don’t NEED to know, Quora is the place for you.

…or, how being a parent kicked my butt.  I did a review of 2009 goals post before I made my 2010 goals post last year.  I missed on many of them but still hit on a good number of them in 2009 and came away with the realization I needed to dramatically reduce the number of goals.  I simplified for 2010 but still missed almost all of them.  2 for 9.  I went a little big too big in 2010 as a new parent with an expectant spouse, lesson learned.  On to 2011, with two kids this time!  Fewer goals and a little more modest.

2011 Goals

PERSONAL:
Drop 30+ pounds by end of July (brother’s wedding)
Build a basic functioning web app (thinking Python / MySQL)
Keep learning (complete a MIT OCW course)

WORK:
Get “1″ Rated
Meet quarterly with mentor(s)

A friend at Apple brought this video to my attention.  Mary Meeker covers 10 questions for Internet company CEOs.  Watch the whole thing.  We are in very interesting times.  I found the 2.5 minutes starting at 14:25 the most fascinating.  Apple grew $12B in revenue to $20B between fall 2009 and fall 2010.  Wow!  Thats about all I can say.

This concept is one of the major themes of the recent book The Lords of Strategy.  I listened to the Audible version which features a very wonkish sounding narrator.  The book is all kinds of academic/intellectual blah blah blah, but I definitely learned a lot from it.  Another of the book’s main points is that the roots of the top consulting firms are firmly planted in the academic and intellectual worlds.  Maybe this explains the choice of narrator?

Anyways, I wanted to jot down a couple of the main themes while they are still fresh in my mind.  Here they are:

1 – Greater Taylorism (that guy with the stopwatch) which led to
2 – The Fiercening of Capitalism
3 – BCG Matrix – the consultant’s Million Dollar Slide
4 – Bain – Thinking AND Executing? – profits at a discount
4 – Michael Porter – apparently not a hit with the tenured crowd
5 – The  Birth of Private Equity
6 – Where Are We Going? – good comments on “the shareholder”

See this link for a long interview with the author that covers most of the main points I’ve called out above.

Pieces of trivia/insights I found fascinating:

Bain was founded by a bunch of defecting BCGers. Bain’s big differentiator was that they wanted to do long engagements with a client and actually wanted to stick around to see the results of their strategies implemented successfully.  I liked the author’s description of the Bain sales pitch as tomorrow’s profits at a discount.  The evolution of Bain came a couple decades later when senior partners realized they’d never become “seriously rich” (only 3-4 million in personal wealth) staying in consulting.  So they started Bain Capital and created private equity.  Mitt Romney was co-founder (somehow I had missed this).  When the BCG Matrix reveals the pieces of a company’s portfolio that aren’t going anywhere (the Dogs), Bain can help you sell them off. In many cases, they’ll even buy the business from you.  Then throw a bunch of consultants at it, cut the costs to the bone, figure out the competitive landscape, re-invent the Dog of a company, flip it, and profit.

Being an outsider is powerful. In the best cases, consultants come in with a fresh set of eyes and lots of spare capacity.  No day job taking up 90-110% of their time.  No internal politics to navigate.  No 2-5 layers of middle management and multiple functions to navigate/get aligned.  Just a focus on analytics, costs, competitive benchmarking, market share, and a motivated senior leader to share the analysis with.  I got a taste of some of the elements of this experience when I interned at P&G.  Now that I have a full time job, it is a little more complicated.  That said, I like my family, so I’ll have to settle for this book as my window into the consulting world.

All in all, an interesting read.  A lot of useful background to help you understand key influences in the history of corporate strategy over the last 50-60 years.  Good refresher on key strategery frameworks.  Some interesting commentary on how capitalism has evolved / is evolving.  I’m guessing the print version is pretty dry, but thats why I did the audiobook.  A couple long drives, a grocery run or two, mow the lawn, a little work in the garage, and all of a sudden you come out a little more knowledgeable with a few more useful mental models.  I like it.
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