Howard Marks’ book The Most Important Thing has sold three-quarters of a million copies. I don’t know what the list of all-time best-selling investment books looks like, but that is up there.
The funny thing is that the book is based on memos Marks began sending to his clients in 1990. And the memos spent most of their existence in obscurity, ignored by readers. He told Barry Ritholtz:
RITHOLTZ: And what was the feedback when you sent the first one out?
MARKS: For 10 years, Barry, I never had a response.
RITHOLTZ: Crickets, just nothing?
MARKS: Not only did nobody say they thought it was good; nobody said ‘I got it.’
Why write into an echo chamber for a decade? Marks explained:
The answer I think is that I was writing for myself. Number one, it’s creative, I enjoy the writing process. Number two I thought that the topics were interesting and that I wanted to put them on paper. Number three, writing makes you tighten up your thinking.
I love this. “Writing for yourself” is underappreciated.
Investors do all kinds of exercises to make sense of the world—modeling scenarios in spreadsheets, conducting diligence on management, or reading pitch decks. But few exercises help clarify your thoughts better than writing.
Writing is the ultimate test of whether your thoughts make sense or are merely gut feelings. Feelings about why something is the way it is don’t need to be questioned or analyzed in your head because they feel good and you don’t want to rock the boat. Putting thoughts onto paper forces them into an unforgiving reality where you have to look at the words as the same symbols another reader will see them as, unaided by the silent crutch of gut feelings. It’s hard to overstate how important this is in an industry where distinguishing what’s true from what you want to be true determines a big part of success.
Most investors I know are voracious readers. They want more than just new information. They want a different perspective, or a new way of thinking about a topic they’re already familiar with. That’s what the best writers provide.
But where do good writers get “perspective”? Where does “context” come from?
Most of it comes from the process of writing.
Good writers don’t walk around all day with 100,000 words of eloquent wisdom in their heads. No one can do that. They take some vague feeling they’ve been thinking about, dig into a bunch, write down what they’ve discovered, realize half of it doesn’t make sense, delete most of it, write some more, realize the new stuff contradicts itself, panic when they realize they don’t understand the topic as well as they thought they did, talk to other smart people about why that is, learn something new that reminds them of this other thing that might tie into the second paragraph, discover that this thing they believed before they started writing isn’t actually true, realize that if that thing isn’t true then this other thing is probably really important, and so on endlessly. Grinding through this process reveals bits of context that are hopefully new discoveries to the reader. More importantly, they were likely new discoveries to the writer before they set out writing.
Many of the good writers you enjoy probably aren’t much smarter than you. They’ve just forced themselves through the process of transferring vague feelings into words and the clarity that generates. The takeaway for voracious readers is that you can discover new perspectives and new context by writing yourself.
What’s your investing philosophy?
What’s your investing strategy?
Why did you make that investment?
How did you feel when that investment didn’t work out?
What have you changed your mind about? And why?
You’ll be amazed at how much you can learn by writing these things down, even if no one but you reads them.