We went out to a gala dinner to celebrate 20 years of these daily messages.
Your editor was asked to speak. Here are his remarks…
How we got started with readers
Addison Wiggin, Publisher of Agora Financial, asked me to try to remember how we got started.
All I can recall is that at the time — 1998 — there were two schools of thought. The main one was that our little investment research business was soon going to be put out of business by the internet.
People came up to me and said so. ‘You can get all the investment advice you want on the internet for free…nobody is going to pay us for it.
The other school of thought was equally gloomy, from our point of view. It told us that we would be put out of business by the big firms — the Goldman Sachs and Dow Jones — who could spend millions of dollars, putting up fancy, professional websites so that readers would find them and become customers. These big firms would dominate the space, like fast growing poplars, shading out the more noble oaks.
But I knew that readers don’t go looking for our kind of ideas. They don’t even know they exist. And nobody wakes up and says, ‘Honey, we need a financial newsletter with a contrarian point of view.’
Besides that, we had a chainsaw! I knew, too, that that if we could just put good ideas, solid thinking, and real research in front of people, we might persuade them that we were worth doing business with.
At the time, I had no idea how the internet worked. I just knew that you could use it to send messages for free. So I just started writing. And I turned to an old friend, who seemed to be more internet savvy than I was, to figure out how to send out the messages.
There were no data protection laws…and no opt-ins or opt-outs that we knew anything about. So, we just sent the message — for free — to every email address we could get. And before we knew it, we had a list of 100,000 or so.
And when I reported this to our colleagues in the newsletter business, they thought we were crazy. How could you make any money sending out your best ideas for free?
New business developments
The interesting thing was that, at the time, people were not used to getting a daily message; no one was. So, I started writing every day…ruminating…cogitating…and trying to connect the dots.
I couldn’t come up with new investment ideas every day, so I often wrote about what was going on around me. At the time, we were living in rural France, so I told readers about the characters who came into our lives.
We had a colorful and eccentric gardener, for example, Monsieur Dubois. And he was a bit of a rascal. One time, we bought some 50 chickens together, 25 were his…the other 25 were ours.
He was supposed to take care of them. But when we came back from a trip, we found that half of them had disappeared. What had happened?
‘Oh…the fox got your chickens,’ came the answer.
‘How did the fox know which ones were mine?’ I wondered.
But he was also a canny source of local folk wisdom. ‘You can try to get away from nature,’ he pointed out. ‘But nature will always catch up with you.’
Tell it like it is
There are other stories about Monsieur Dubois that are worth recalling, but the interesting thing was that readers remembered them. For years after, Dear Readers had no recollection of our investment analysis or our economic insights. But they came up at conferences and asked:
‘How’s Monsieur Dubois doing?’
I guess the lesson from that is simply that there was something more real and more satisfying about what I saw with mine own eyes and heard with mine own ears, than there was about my guesses about future GDP growth rates.
I just told it like it was. And we had a very high open rate.
So, after a few months, we finally decided it was time to figure out if this thing could pay for itself. We didn’t know. But we put in an ad for one of our newsletters. And lo and behold…people bought. And maybe we got in a few thousand dollars.
Based on those results, and on all the time we had put in, we calculated that we were earning about 11 cents an hour. But the important thing was that we could see that the model could work.
And 20 years on…that model is still in use in our business, and in the whole industry.
The trouble with the truth
But let me try to explain it more fully.
Addison worked with me in Paris. We shared a desk. And he had a very old and overly-sensitive computer. Whenever I shuffled something around on the desk…which was just about every day…his computer would turn off and he would lose all his work for the day.
And then, when we needed someone back in Baltimore to take charge of a research and publishing group that was focused on commodities, which we called the Hard Money Group…I suggested Addison for the position; I thought he might at least get a new computer out of the deal.
Anyway…we have a business in Paris, of which we are very proud. It’s called Les Belles Lettres. For more than 100 years, it has been publishing what you might call the Old Truth or the ‘permanent truth’…Those are the ideas of ancient Rome and ancient Greece…Plato, Aristotle, Heraclitus…that have withstood the test of time.
A matter of perspective for readers
The trouble with The Truth is that it won’t stand still. What’s true today is often a lie tomorrow. And that’s why we try to anchor our opinions and ideas in these Old Truths. Like nature, you can’t get away from them.
But it’s the new truth people want. Nobody wants to be reminded that things go down as well as up…that life can be tough…and that you can’t spend more than you earn.
They want to know what stock will go up tomorrow. They want to know who will win the next election. They want to know which ideas will flourish…and which will wither and die.
Kooks, geniuses, and gurus
Where do you find this truth? Tomorrow’s truth? Not in The Washington Post or The New York Times…or on TV. That’s where you find what people think today.
Instead, to find the new truth, we have to go far out on the knowledge spectrum to the edgy part…the shady and speculative part…where the kooks, geniuses, and gurus are.
At any given time, most of the ideas that pass for truth are just fads and fashions. Our job is to cut down these false truths in order to allow a little daylight onto better ones. Let me give you some examples…
There was the truth in 1999, for example, that the dot-com stocks had ushered in a new era of permanent prosperity for all.
And that truth morphed into the truth of 2005/2006, that you can’t go wrong buying a house…because house prices never go down.
And there’s a similar truth today…that you can’t go wrong buying stocks because the Fed has your back.
We rev up our chainsaw. We cut a little deeper every day. And we know we’re right when even our Dear Readers don’t want to hear it.
At odds with just about everybody
People don’t like to see their fashionable truths attacked. And attacking them puts us at odds with the mainstream press, the government, Wall Street, the academics, and all the people whose reputations and wealth depend on them.
And…We’re often wrong…which leaves us exposed to ridicule as well as regulatory threats.
‘You said that stock would go up…’ say the critics.
‘You said Congress would never go along…’
‘You said the economy would be in recession by now…’
When you’re looking into the future, there are an infinite number of things you can be wrong about. Since we’ve been writing for so long, we’ve probably already been wrong about most of them.
And we’ll get the rest of them wrong in due course.
But it is not given to man to know his fate; that’s an ‘old truth.’
Telling the truth
And our Dear Readers know we are mortal, just like they are. They don’t expect us to be right all the time. They only expect us to be honest…about what we see and hear and think and know…and to work hard to try to discover tomorrow’s truth before it is mainstream news.
That’s been our mission since we began writing 20 years ago. We are out to connect the dots so we can see…
…when to buy stocks…what the Fed will do…what will happen to our economy…or where the country is going…
We mock the conceits of the great and the good. We laugh at absurd trends and foolish fads…and at ourselves…
…and we squint so hard our eyes hurt, desperately trying to catch a tiny glimpse of real truth.
And we never forget our humble motto: sometimes right, sometimes wrong…and always in doubt.
P.S. Back despite popular demand…