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I have 26 of these newsletters under my belt. Thanks to all this practice - not to mention learning how to write on deadline for the school paper - I've gotten to the point where I knock these out without too much fuss.
It used to be that I began with the "So what?" - the key point - and then scrambled backward for a hook that would set up an intriguing segue. Now I tend to go the other way, beginning with a story about what's happening in my life and looking for an investment lesson worthy of being shared.
Either way, the fun part of writing this sucker is the feedback I get, even if it's not always fan mail. It means I don't have to brood like B.B. King when he sings, "Nobody loves me but my mother, and she could be jivin' too." It's nice to know that people (you) are reading the damned thing.
In response to my last newsletter, and speaking of "not always fan mail," one reader - John - took me to task:
"I couldn't disagree with you more... do you make it a habit to invest in companies where management has very little "skin in the game"... I don't... it's one of the major things I look at before investing... one of my first checks is the proxy to see what management and the directors own... yes, it's not perfect, like many things in life, and there are always exceptions to the rule, but this is a game of probabilities, and with this one, it pays to bet on the guy or gal with a fair amount of [skin in the game]."
To reiterate my position, I think skin in the game is important, but it's only one data point and it doesn't tell the entire story.
But what about John's observation re "management?" Last month's newsletter was focused exclusively on money managers, but how about the people on the inside, the ones running the company in question day-to-day? Does the "more skin the better" rule apply to these folks?
Alas no. Here too, there are plenty of exceptions to such a tidy correlation and it's more like "Goldilocks and the Three Bears." The trick is in telling what amount is juuuuuuuuust right - attitude can sometimes trump ownership.
