I WANT To Be The Slow Money


We live in fascinating times:

  • Warren Buffett is on Twitter. At least he tweeted once – “Warren is in the house”, probably trying to subtly remind us that he still likes housing stocks. 🙂 In 2008 he didn’t know how to listen to his voice machine and this is why Lehman went under. When all is said and done, he remains the best investor of all times. The Steve Jobs of Investing.
  • A few weeks ago, the Associated Press twitter account was hacked, which caused a mini flash crash in the world most liquid asset – the S & P futures. We don’t even remember that anymore. A few weeks is nine months in social web time.
  • News and rumors are breaking faster on the social web than on $2000 a month Bloomberg terminals. They are analyzed faster and with much deeper perspective on the social web too. No research shop could possibly compete with 30 independent analysts, who could devour any earnings or economic report in a matter of minutes. At least, it can’t compete on velocity.

The world is going faster. A lot faster. Does that mean that you have to become faster in order to survive and prosper. No! Velocity is not your forte in a world driven by high frequency algorithms that make several thousand trades in a second. Your only chance of survival is to become the slow money. To step back, look at the big picture, spot trends (catalysts) that are going to last for more than a few days and find a way to ride them.

Being The Slow Money doesn’t mean that you have to think like Warren Buffett. He likes to joke that he loves businesses that could be run by idiots, because sooner or later it will happen. He says the he hates uncertainty and wants to invest in companies that are likely to be still around 10 years from now and with higher earnings.

The truth is that no one knows how the world will look like 10 years from now. Maybe people will still eat Cheerios, maybe they won’t. Who knows. We might be all on customized nutrition pills by then. Investing in companies likely to be around 10 years from now is not a guarantee of success. We don’t know how their shares will perform in the meantime. There are no sure things in the market. What is widely perceived as being safe, could be very risky, especially if the consensus opinion is on your side.

Being the slow money means that you don’t have to obsess with every move in the markets and try to find an explanation behind it. Being ‘the slow money’ means that you don’t need to own 50 different positions and to chase after every breakout to make a few percents. Being ‘slow money’ also means that you might have to cut from your exposure to the fast web…