TIME TO PIVOT?

When I started this project a little over a month ago, I set out with the intention of writing a weekly newsletter that would serve as a public track record of the work I am doing as I continue to build Charted Holdings, a permanent capital holding company (PCHC). With my last issue having been published three weeks ago, I recognize the fact that this newsletter has been anything but weekly. This isn’t due to a lack of effort either. Truth be told, I wrote this issue three times over and the previous issue twice. In both cases it felt as if I was trying to fit a square peg into a round hole. Needless to say, this medium that was intended to highlight the work I am doing has become more work than that which it was meant to feature. So, I spent the last week trying to resolve this inefficiency.

My solution? Eliminate the structured format I created when writing the first issue. That template was designed to keep each issue consistent and to help me complete them in a timely fashion. I have since found that it has had the exact opposite effect, and therefore I decided it was necessary to pivot away from that strategy. Interestingly, my newsletter format wasn’t the only thing I considered pivoting away from.

After reading chapter seven of The Intelligent Investor, where every investment approach offered up came off as either archaic and no longer viable or incomplete, I seriously questioned whether becoming an enterprising investor was worth it or even possible for that matter. I literally created this project to build the skillset of an enterprising investor and to test those skills in a sandbox that grows alongside them. First learning to “develop a system to identify good businesses whose stocks are undervalued,”¹ then building on that system as I look to acquire entire businesses. For me to weigh the alternative of becoming a defensive investor and just dollar-cost averaging into an index fund is not something to take lightly.

Thankfully, Jason Zweig’s commentary on chapter seven knocked some sense back into me. He did so by laying out several actions the enterprising investor should take when getting started. Most of them aligned nicely with my current plan of progression. The only point where my thought process differed came from a recommendation of Graham’s that Jason Zweig had mentioned. That recommendation was to start on a paper account as a way to test ideas and train.

I find this extremely ironic considering I engaged in this practice frequently during my time as a day trader. I never deployed a system on a live account without first testing it on paper. It never occurred to me that I should do the same as an investor. To be fair, when I started investing ten months ago, I hadn’t conceptualized Charted Holdings. I didn’t know I wanted to be an enterprising investor nor did I know what that entailed. Even though I started on a live account rather than a paper account per Graham’s suggestion, I would still consider myself to be at the exact same starting point. I believe this to be the case because I have yet to “develop a system to identify good businesses whose stocks are undervalued.”¹ My plan moving forward is to test my ideas and train myself using the investments I have already made on a live account.

While my progress has felt stagnant over the past few weeks, I do believe it was time well spent. I identified and removed a process that hindered my ability to consistently write and upload my newsletter in a timely fashion. That might seem small, but this newsletter is a key component in the construction of Charted Holdings, and building a PCHC is about more than just making investments; it’s also about operating and managing businesses. This strategic business decision also created more time for me to focus on my development as an enterprising investor. Additionally, I’ve established a clear understanding of when it’s appropriate to pivot and when it is not. The two situations that I have outlined above have one major difference and that is a trial period. I tested the system I created for my newsletter over the course of a single month and failed to produce new issues on a timely basis with it. Conversely, I have yet to do the work of an enterprising investor and for this reason alone it’s far too early for me to even consider pivoting. I believe this knowledge will come in handy as I continue to manage businesses and investments alike. Last but not least, I am more confident in my approach to this project due to Jason Zweig’s commentary on chapter seven and I am comfortable proceeding as planned.

Thanks for reading!

- Eric Seel