Ignore, avoid, reject

Weeding out charlatans, clutter & crap

“Ninety percent of everything is crap” - Sturgeon’s law.

When it pertains to investing, Theodore Sturgeon lowballed his estimate. Surviving this messy world is mostly about weeding out crap, especially when it lurks under a dangerous veneer of intellectual sophistication or well-tailored chicanery. A wise investor once said “We’re in the rejecting business”. True, but rejecting crappy businesses is the final bit. To get there, I first need a mind uncluttered by crap. The core of investing is a tireless ability to ignore, avoid and reject over 99% of what’s thrown in my general direction.   

I ignore:

‘Experts’, economists, talking heads, finance professors, other astrologers.

Those without skin in the game. Those with more cufflinks than books.

Macro, politics, rates, currencies, commodities, overrated pathogens, flows, what others buy/sell.

Warren Buffetts of anyplace other than Omaha.

Fictional parts of reports: price targets, columns with projections.

Stock prices, except when it occasionally facilitates action.

Doomsday prophets, perma-bears, self-loathing Indians, condescending colonial op-eds.

Any criticism of Dravid or Ilaiyaraja.

I avoid:

Soliciting opinions, especially from those in my business. Nullius in verba (on the word of no one).

Fake precision.

Forecasts. Click & drag. Projecting forward & discounting back. XL-giri.

Lying my way into a buy-price, via the above.  

Neat explanations of the past. More generally, ascribing causality in a messy world.

Second-guessing business managers. Telling them how to do their job (‘value-add’, in PE jargon)  

Whatsapp groups with triple-digit membership.

Humans, well before social distancing became a thing (misanthropy is useful investor trait).  

I reject:

Anything I can’t understand (which is a vast majority of the messy world).

A spectrum from smells funny to too good to be true to pickpockets.

OPM addicts. Living on the edge. ‘Oh-no crazy’ people.   

Adverse odds: airlines, lenders on steroids, kissing frogs, drunk driving.

Fashionable companies. Trendy valuations.

Broccoli, ragi idli, uncooked foliage.

Every investor claims to seek good businesses. Consistent with mathematician Carl Jacobi’s maxim (Invert, always invert), success of this endeavour depends mainly on how we fare at the opposite end, on how effective we are at rejecting crap. This can get tedious, but staying the course is vital. I can reject 9 of 10 companies and feel good about my standards. However, if the correct ratio is closer to 99 of 100 (as I’ve empirically observed), then 90% of what I own is sub-par. Day after day, I need a ruthless and relentless noise filter. Ignore, avoid, reject. Repeat.

Goodness is almost a residual. More importantly, without an uncluttered mind, there’s serious risk of not recognizing goodness when it shows up or not acting on it with appropriate conviction. 

[Originally published this April at https://www.linkedin.com/pulse/ignore-avoid-reject-anand-sridharan/]