Originally Written in December 2024
Introduction
The idea to start this opinion column (blog) originated during one of my many routine discussions with a close friend in which we meandered from exchanging views on the current market to contemplating our shared experiences investing and ended up philosophizing about human psychology and investor follies. It was this last topic – the recurring mistakes and missteps in investing that our peers, many of them finance professionals, succumbed to – that served as a call to action. The fact that they work in finance yet mismanage (their own) assets is far from unique – after all, the average hedge fund manager does the same for their clients and charges fees for it. Most often this mismanagement is a product of well-intentioned behavior that even imagines itself to be prudent. But that does not make its results any less undesirable, and it certainly does not protect those poor participants from feeling the damaging effects of their prolonged and self-ascribed casting as (the greater) fools. At the root of these misguided behaviors stand common human emotions, greed and fear, coupled with a growing tendency for comparisons (largely due to greater information availability), an increasing importance placed on success, and a widening of the social, financial and opportunity scissors that make anything but top percentile achievement feel unfulfilling. And while these conditions are not entirely novel to the present moment, their combination is made explosive thanks to the meteoric decline in our collective capacity for discipline, focus and long-term (independent) thinking, not to mention delay of gratification, in the recently-instituted high-dopamine information age.
That’s a lot of gloom and doom, I admit. But after concluding countless conversations with exactly the above sentiment, it is hard not to paint a doomsday picture. What’s worse is that I don’t believe these trends will reverse themselves – if anything, the continued productization (and monetization) of our collective (in)attention, an acceleration of the (dis)information machine, and the outsourcing of our thinking (to financial “experts” and increasingly robo-advisors and AI) will lead to the current market disfunction worsening. And while I won’t claim to have the ability (or influence) to reverse this trend, it felt right to at least chronicle its progression. The point of this corner of the Internet thus boils down to a simple mandate: to regularly record my opinions, which I hope will help illuminate the madness that is blatantly occurring in the markets and to attempt to offset (or provide an alternative to) the ever-growing stream of unproven and unhelpful investing ideologies, tactics and (often unabashedly) schemes.
Philosophy
While Graham and Dodd coined, codified and later popularized their vision for sensible security selection, today known as Value Investing, the underlying principles they speak of are intuitive to even those that know very little about asset pricing. Perhaps this is why the movement gained steady support among financiers and laymen alike, and why the core principles of dutiful and disciplined investing have long since become truisms – buy low, sell high, rinse and repeat. But Graham and Dodd operated at a time of relative financial primitivity – before real time data was readily available across several platforms, before the heightened disclosures imposed on corporations, and certainly before the broad and increasingly fervent participation in the markets by the general public, cost free, and increasingly without the safeguards of traditional intermediaries (financial advisors, dedicated money managers, or corporate pension plans). In a sense, Graham and Dodd worked to define the unknown and the heavily misunderstood, bringing a recipe for order during the depths of the 1930’s Great Depression – while the U.S. Government passed legislation to prevent market meltdowns from re-occurring (regardless of how ineffective it turned out), the fathers of Value Investing fought to avoid such events in the future by educating the general public and increasing information symmetry across market participants. Their efforts turned out influential and well-received, cementing this school of thought into gospel.
But the availability of information, no matter how prescriptive, and the propensity for people to use it are two separate things. And despite the steady and meaningful increase in information availability since Graham’s and Dodd’s time, the boom and bust cycles of markets continued, asset mispricing remained, winners were minted and losers covered the tab. Having a (literal) guidebook and becoming an Intelligent Investor continue to be a chasm apart, now more than ever. The gap is made wider by a collective aggregation of and fixation on short-term success via investment speculative strategies disinterested in proper asset pricing and instead concerned with animal spirits – not to mention the displaced and exaggerated revelry (debauchery) surrounding such strategies. Somehow the success of these alternate tactics has become synonymous with counterexamples to Value Investing. Skeptics of the “old school” of investing mask their madness as modern methods that go against the “outdated approach”, conveniently forgetting that their own schools of thought are more ancient than the Value Investing framework which they shun – after all, the “Tulip Mania” of the 17th century was fueled by many of the same arguments that now paint themselves as novel approaches.
None of this is to say that Graham and Dodd have been toppled, that they are no longer relevant or that their legacy has been forgotten – some disciples, notably the Omaha Oracle, continue to proselytize their message and are admired by the general public. But here again we find a stark difference between admiration and adherence – individuals that defend their uniqueness huddle and become herds, crowding the same trades. In all their hurry to stand on tables and cry to the heavens that they are not like the other fools, the floor is left empty – and the over-inflated bubbles come bursting with deafening echoes. The common spectacles come to mind – the DotCom debacle in 2000, the housing crash in 2008, GameStop and other meme stocks a few years back, and a host of (what I believe will turn out to be) speculative pockets today – Bitcoin and related cryptocurrency (rug-pulls in a new and improved flavor), AI startups and grifters, and heavily concentrated (flock) mentality around a limited number of prominent investments (Mag 7?). Were Graham and Dodd to come back in modern day, they may think that Charles Ponzi returned with them, and that his malice of the 1910’s never occurred – for how else could the same mental tricks continue to plague the investing community?
Argument for Value Investing (Today?)
So, what is there to do about these irreparable human follies? The answer is a matter of personal opinion, but my bias is clear (not that I try to hide it). The guidebook hasn’t changed, but it now lies beneath scattered heaps of an unimaginable amount of rubbish. There have been a handful of other helpful books published and a host of influential thought-leaders minted since Graham and Dodd, but they are outweighed by magnitudes by the undisciplined and unproven. The party continues to be too busy standing on tables. And so, the first step may be the most daunting – to take a leap, away from the others, and go searching for truth on a messy and littered floor under the scornful gaze of the majority. This endeavor is made harder still by the ceaseless exhaust of useless information adding to the already littered floor – this is where the name for this blog originates, as I view today’s ever-increasing flow of (dis)information equivalent to the fog through which we must learn to peer. This art of peering through fog is where I hope to help, even if marginally, by contributing my thoughts on anything and everything occurring in the markets, as long as I find my thoughts worth sharing. In some way, this is step two of my own journey toward Value Investing – having discovered a lead despite all the noise, one must engage with it, hold it close and internalize its lessons to avoid once again stumbling blindly into the fog. Therefore, I hope this journey is as beneficial for me as it will be for those that read about it. And while I will discuss individual companies, case studies and concrete investments, the overarching intent is broader – to expose helpful thinking patterns, repeating themes, common mistakes and hard-learned lessons – in other words, to engage with theory via specifics.
Hopefully this is all helpful context for what is to come, for the flavor of writing that can be expected, and for the North Star that will guide that writing. Let me close by admitting I am no Graham, Dodd, Buffet, Munger, Marks, Klarman – you know the list. I haven’t spent decades perfecting my craft. I have only a modest base of experiences on which to build, and I am excited by the plethora of situations I have yet to encounter and the tumbles I will inevitably suffer on my climb. That is to say – I would prefer you don’t treat my word as gospel, certainly not the way that the books and speeches of the impressive investors I have listed can be regarded. But, it is my intention (and sincere hope) that a few nuggets of wisdom, lucky as they may be, percolate from my ramblings and stick with you.
Up and Out of the Fog,
Marek
Timing of this post
The above text was written in the early weeks of December 2024 and later shared with a handful of my close peers for their opinions – as an opening salvo, I wanted to be sure it would land well. That said, the lengthy delay is entirely on my shoulders. And the timing, I admit, isn’t ideal – it took far too long for me to enact what was the launch of a simple online blog, largely due to the forces of inertia. Since writing the above introduction, the music indeed stopped playing and the grand ball came to a screeching halt. As with prior bubble bursts, the undoing was rapid (after all, a bubble doesn’t fizzle or deflate, it simply pops), and yet the cause of the burst had little to do with rational market behavior returning to the forefront of people’s minds. The imposition of record-high tariffs from the U.S. on essentially every other nation presented the kind of paradigm shift that the markets hate – and it came with a side of negative uncertainty, not to be confused with positive uncertainty, such as that associated with the benefits of new technologies, which tend to be a tailwind for speculation, as seen with technology stocks even as late as the start of this year. The above writing may seem out of place now, like a lighthouse deciding to turn on its beam after a ship has already wrecked ashore. But it is precisely because we are in the process of a market correction that I am deciding to go forth with the blog. After all, we find ourselves in a rather uncommon time – markets spend a lot longer climbing than they do crashing. There will be a lot of stimuli to write about, and the fruits of a Value Investing mindset will be clearer than under bullish conditions. Perhaps this will make at least a few of my arguments more poignant.
Let me end by saying that I was not somehow unique in seeing the writing on the wall – Buffet hoarded cash, Marks re-issued his bubble-watch warning, and a host of strategists started to sound the alarm bells on U.S. equities. And let me also say that we could have all just as well been years early to cry wolf – a different set of governmental policies could have caused a market rally instead of the current drop. But the logic of my argument (and that of the more impressive investors listed) was sound. The balance between risk and reward had tipped too far to ignore any longer, and the possibility of gains seemed speculative while the probability of loss appeared all but guaranteed.
Foggy Mountain Capital 
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