This website was started to create a transparent platform for readers to follow along a thought process (and trading process) to compare/contrast versus the average mutual fund in existence. [Fund FAQ/Pledges] Due to very good success in a down trending market the pledging by readers took off through last summer - many months I was getting $500K+ in pledges towards my ultimate goal of launching a mutual fund with at least $7 million. Since the carnage of September 2008 investor interest has waned as many have been losing a lot of money in the market. In January 2009 I decided to revamp anew with both a new tracking system that better suits my investing style (both long and short) as well as a new pledge sheet. [New Pledge Sheet - Obama Era v 2.0]
So the conundrums are as follow... I put a monster amount of work into this site; it literally is like a full time job. For the first year and a half I did not even have advertising as I was hoping this was a temporary stop to bigger and better things i.e. "the real thing". But while readership continues to expand on a weekly/monthly basis (thank you) - the ultimate goal of the site has stagnated. I read yesterday that not one mutual fund (out of 9000) was positive in 2009 year to date - than I looked at my results yesterday and I was down 0.8% for the year. I am beating the S&P 500 indexes by 17% year to date (2009) and at times in 2008 was up by 30% versus indexes.
This leads to the question of type of readership - due to the subject nature (stock specific much of the time) I tend to attract active investors, rather than what is typically found in a mutual fund... passive investors. The latter wanting to hand their money to someone else to manage. Those folks seem more interested in letting Fidelity lose them 40% last year and another 20% this year... rather than find a site like this and give someone else a shot. Many people who visit are active investors themselves and looking for trades - whereas the person I need for the mutual fund is (generally, not always) not as market sophisticated and is looking for a money manager to handle their money. So we have a divergence in audience versus goal.
Just about every week I get 1-2 people asking "why don't you charge for everything you are doing? I'd pay!" I've struggled with that because I don't want to be a "newsletter writer" nor is my overall style easy to communicate. (even now I'm just posting "major trades" - not a lot of the small adjustments) I don't wish to make the entire site "fee based" because I now have a long (and accurate) history on economic calls, and sector specific calls which is part of building a track record as well. (speaking reality and standing out from the crowd, when the crowd is selling you Kool Aid) [Economic Forecasts/Track Record]
So my thought process is to keep the economic & general market type of posts here on the main site (free as usual) and potentially move just the stock specific (the "Bookkeeping") type of posts in a subscription model i.e. monthly fee. This would cater to the "active investor" whereas the passive investor whom the website was originally supposed to be going after will still have the broad thought process, my investing track record out in the open [Performance/Portfolio], etc
Hence, I'm going to ask the "trade along" active folks to give me feedback on two questions with the obvious caveat 98% of people prefer something for free rather than pay
- Would you be willing to pay a nominal monthly free of say $20/mo for a "look over your shoulder" stock specific service - introducing new ideas, set ups, actual trades on both the long and short side?
- And if so, would you prefer a website you'd log into with username/password or an email service?
Examples of type of posts in a fee based model
Again, I am one of the few people who actually have people send me emails to ask me to charge them ....and thus far have resisted. But until I figure out a way to find the right audience for my original goal, and if I am going to put this level of workload on independent research for an indefinite amount of time - I have to figure out a fair way to do it. In a perfect world I'd have a large subscription base and I could just do this (website) full time and get more than 4 hours of sleep a night while working to the ultimate goal. But nothing works out perfect.
My email is in the upper right part of the website if you haven't sent me a note before. So if you are "active investor type" utilizing the website for the "stock idea" reasons I listed above, please shoot me a message with answers (or general thoughts) on the two questions above and I'll make an assessment based off what I receive as feedback.
16 comments:
Free is not a business model. If this blog was started to showcase your track record with the hopes of launching your own mutual fund, then you anticipated a return on your effort in the form of attracting capital commitments.
If the costs -- in terms of time -- are not worth the revenue -- in terms of pledges -- any good businessman would close shop. The only question here is whether it is safe to assume that pledges are a good proxy for actual capital commitments (e.g., is it possible that active investors will trumpet your work to friends and family who value said readers opinion on financial matters).
It's a tough call. But no one ever said starting a business is easy. I am on the fence as to whether I would pay for your member only content. But I don't know how representative I am of your readership. I, for one, read your blog daily but have not made a pledge, but could certainly see myself making one in the future, because I want to see how you perform over time. I am not an active trader and would happily invest my 401K with a solid money manager.
At the same time, I don't know that I would have continued tuning in, had you not provided the level of detail you have to date. Hope this helps.
In any event, I would recommend that if you do charge people for content, you should do it as a newsletter until you have a solid base of paying monthly subscribers. Don't waste the time or the capital in a secure website unless you know that you'll get good return on your investment.
Finally, I would note that many entrepreneurs fail in the business the start, but succeed in the business that their initial failure lead them to. I don't by any means intend to say that your goal of raising a mutual fund has failed -- only time will tell. However, you may have stumbled upon a very profitable business in the form of a subscription based investment newsletter / website. If reader's responses imply that this could be financial rewarding, leave open the possibility that you may have inadvertently created a significant business opportunity for yourself.
All the best. I look forward to seeing how this plays out.
Regards -- Jesse
a few thoughts.....
i dont come here for the stock trades, i come for the snarky (and intelligent) macro analysis. with that said, i do pay attention to your trades, and i have been very impressed how you have navigated this bear, particularly the last 6 months.
like many people (i suspect), i have never pledged, but i wouldn't hesitate on letting you manage 10 or 20 grand. i have only seen one slight misstep (overstaying your welcome in the commodity/global growth space), but you are in good company on this one....no one is perfect, and i think you are about as close to perfect (as a money manager) as i have ever seen.
the fact that you are only down less than 1% YTD is a testament to your skill, and i am pretty sure all your regular readers would agree on this point.
IMO, the bigger struggle, for you, is reaching the people that have all their 401k money in a fidelity index fund, and dont know what a P/E is. i don't have the answer, but i do know that your transparent trading history and verifiable returns will win these folks over once they discover you.
no real answers here, just random thoughts, and (hopefully) some encouragement. you gotta realize, you are trying to start a fund in the middle of a flippin depression. be patient, keep your eye on the prize. it''l happen, just a little slower than originally planned.
I do some trading, but not enough to justify $200/year in the current environment, where equities are pretty scary. But quite possibly when we reach a point where holding stocks for longer periods of time makes more sense.
I just hope there is some way for you to find the means to keep this website and your goals going. This is one of the most informative and entertaining investment websites around, and I do feel you have great potential to manage a fund.
Keep at it, Mark. Cut back on the blogging if you must, but keep this going. I just feel you will reach your goals eventually, and I'll enjoy reading the blogs from the person who is managing some of my money.
Hang it there.
Time is precious, though, so I recognize the challenge you face.
I know many other people who have subscription sites and they usually have some email or alert system to set up trades.
They would usually do a "pregame" for the next day after the markets closed, and then charge the fee for that service because it can directly lead to profits and thereby has value. That would be a good idea for your position management and trades perhaps.
I have yet to make a pledge, if I had a 401K I would definitely try to allocate a portion of it to your fund, I mean we've seen perhaps the most brutal market maybe ever and your fund barely took a hit, when the "down 20+%" year is take off the table it boosts confidence a lot.
I subscribe to Realmoney and have come to realize aside from a couple of the guys there...they are mostly useless, and that was like $99/year (I got the special deal), I think you have much more valuable insight than them because you don't just report the news, but do so without the perma-bull spin, and actually have a disclosed track record and transparency. (unlike Kass/Marcin).
I would be willing to pay a subscription fee just to see any of the content of the site, let alone "exclusive" exclusive content, of course charging a fee for all your services defeats the function of trying to attract the masses to raise funds.
Bill
I read your blog occasionally (one a weekish). I know enough to know that I can't possibly read enough or trade quickly enough to match the professionals--but very few professionals seem to be able to consistently beat the market. And the ones that can don't stay in mutual funds long.
I'd rather have my money managed by a professional--but most of their returns don't justify their fees. This means I'm stuck between managing it myself and sticking my money in an S&P ETF.
All of this is to say that I think there's a place for your mutual fund in the market--but that maybe it'll take a critical mass before you can actually raise enough money. I don't think you've waited long enough to say that your original idea isn't going to work--and by creating a subscription newsletter that's what you'll do.
I'm also mostly interested by the macro view, I look at the trades but not in details as often it's almost day-trading, I'm more interested by the thinking behind the trades though.
I have been subscribing to various newsletters and website in the past couple years, and realized that most of the time I was not better off than just buying S&P.
The issue often comes in how performance is calculated, how quickly the customers can react to the trades, trade allocations, etc...
Only one newsletter (www.optionpundit.net) was better than the others but there was too much trades going on some days, and the execution of the trades (due to heavy options trading) was way too important to get good result and work for my style.
A couple of other things, I learned the hard way. A proper risk management is to have several stocks to spread the risk. This does not work very well with newsletters (either too many trades at the same time, or you keep them around too long and so why do I have to pay every month? Have to handle with new comers as well, etc...).
The other issue is a question of cost, if I invest $5K on a fund at 1% cost, that's $50 per year and I don't have to do any trade, manage allocations, and the money will be blocked so I'm not tempted to do something with it. And I can be spread over 20-50 different stocks without trading fees killing my account.
But with a newsletter, even at $20 a month, that represents 4.8% of the $5K investment. Then on top of that I can't diversify as much, have to manage trades, allocations, be tempted with other trades thus become short on cash when I have to do the newsletter trades.
Newsletters are particularly crowded too, so that may not be as easy to find enough people.
I'm waiting for your fund to start so I can invest there. :)
O.
I'm more interested in your macro views and your fundamental analysis on particular sectors/stocks (for the long-term). I do skim over your short-term trade ideas...I dont actively trade them but have been very impressed with your calls. That said, I worry that you'd alienate your loyal non-active trading followers who would like to pledge money by taking this aspect of your strategy private. Plus, I worry you'd get so caught up in generating short-term trade ideas for your newsletter that it would take away from your macro/fundamental analysis posts.
I guess I'm saying I wish you'd try to stick it out a little longer in this current format.
Maybe you could try opening a donation jar for people to paypal you money?? See how that goes first???
It seems like many before me, I'm also reading for the macro views and less on specific trade setups. Although; I've found your blog to be a good source of tickers I'd never have considered before. As for a pay service - yeah, I'd probably be in for that, but then again, I'd rather see you set up your mutual fund and I'd put some money in that direction instead for "portfolio manager" diversification as per your original goal. I suspect that once it's up and running, it will grow far faster than you would expact, and definately faster than the rate of gathering pledges as you'll have an "official" record and word of mouth spreads.
Best of luck
In my humble opinion:
1. I am here for your fundamental analysis and synapsis of the most important news of the day, not the stock trades.
2. You trade way too much.. it's adversely affecting your performance. In a mutual fund with 250 million to deploy, do you think you can jump in and out of TWM every 20 minutes?? Reduce your turnover and your results will be much better.
3. Dont give up on the fund manager goal... the market will bottom out eventually and it will be like starting a fund in autumn 1974... and every other fund is posting dismal numbers so relative to them you can have a good track record... I had a nasty 2008 but my fund got to #3 spot in the latest marketocracy rankings: http://www.marketocracy.com/cgi-bin/webObjects/Portfolio.woa/ps/ManagerPublicPage/login=andreik
I suppose I would pay a monthly fee, and $20p/m is really not a lot of cash IMHO. I might be in the lesser here but I quite like your trading style because it is very different to mine. I think I derive enough value from that to write off the 20 bucks.
Keep it up boy.
Mark, I would pay a monthly fee to read your thoughts, trades, analysis. TJ
Mark,
I have been reading your site daily since June 2008. I am a skeptical person when it comes to money and to trust someone else with my money, I want to see their track history. You do not have a long-term track history with your business model, and I don't make a hero out of six month or one year performance.
I believe that charging a $240/year will inhibit growth in your future readership, which will, in turn, make it more difficult for you to attract investors to your mutual fund. So the question is: would you risk delaying your fund launch even further to bring in $20/month from your readers?
I'll give you my 10 grand when your fund launches, but only if I stay a reader... don't do anything that makes readers think twice about staying with your site. $20 can cost you thousands later.
WB
Marko,
You could add a "Donate by Paypal" button on your site so that people who are itching to donate can do so.
You should stick to your goal of becoming a money manager and stay away from competing with the gazzillion sites/blogs out there who charge for their stock trades service and newsletters. I come here to read your views since Aug'07 and not for stock trades (may be because I am never short of trading ideas from my daily scans of tons of charts/earnings). Hope this helps and thanks as always for what you do for this site, although you do it to meet your goal of becoming a money manager, which is what your primary focus should be I feel for longer term success.
Best, Pankaj
Mark,
I also like the Donate by PayPal button idea. It gives those that have told you they would pay an option to do so while not hampering your ability to gain ad revenue and audience.
Stick with the mutual fund goal.
Mark,
- I would not likely pay monthly fee for trade details/ideas. You trade too frequently to want to try and replicate myself
- But i do value tracking your own thought process with regard to trades (so i like reading it and not acting on it) and it persuades me to contribute to your fund (even though I have not pledged)
- Your move to include shorts has greatly increased your value as a fund manager (i.e., I dont believe many mutual funds are capable of doing this properly)
- I think you should initiate the real fund in the least costly way even if you are short pledges. Build it and people will come. Also i am okay with more advertising on website to generate money in the meantime.
HRH
I like your stuff. Have been following it for about a year, and have made more than 200 usd from duplicating some of your trades. I like the idea of a doante via Paypal option. You could put up something like donate what you think this data is worth. One area of your site for macro economic/mutual find stuff, and another for the nitty gritty trading stuff, with a Paypal option?
That being said, I would happily pay the 20 usd per month for all your data. 10 USD would of course be better!
London STUD
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