Since (re)launching taldavidson.com at the beginning of April, I am honored to have many smart people visit the site and sign up. I am humbled by the encouraging feedback that I am receiving. Here are some of the warm words that I got over email:
“Always enjoy reading your emails and blogs”
“I don’t know you but like your personal approach to sharing your investing success and methodologies. There are lots of snake oil salespeople out there today!”
“Everything you bring or we bring is a good thing, however I am afraid that you share too much of your knowledge and lose an edge for your site.”
“Hi Tal…good stuff, keep up the good work!!”
It is truly encouraging. And I need the encouragement because creating algorithms and putting on this website is A.LOT.OF.EFFORT.
But lately, several readers raised a crucial question. A question that could (and should) interest all the readers of Quant Investing…with Tal Davidson.
The question was:
Will This Website, and the screeners it contains, still be here in the long term?
Which is a perfectly legit question. Investors wanting to use the screeners to build real-money portfolios need assurances to the availability of the service in the next 5, 10 and even 20 years.
All the strategies on this website are long-term strategies and are not recommended for folks with less than 3-5 years investing horizon. Thus, an investor is entitled to know if the screener will still be around when the time comes to rebalance. Nobody wants to build a portfolio according to a strategy on this website, only to find out that it’s gone after a few months. What would the investor do with her holdings?
Tl;dr This website is here for the long term.
And now for the complete answer to which you are entitled.
First, designing the quant strategies on this website, and the website itself required tremendous efforts. I’m spending my scarce free time doing that while keeping a full-time senior position at a tech company, and while raising three kids. It had taken me literally years to get to the point I’m at with taldavidson.com. It required and still requires, enormous amounts of will and dedication. Yet, as you probably noticed already, it’s my passion. I did not go through all this effort just to disappear one day. The website is the culmination of a long process of self-search, and a result of deep understanding of what I want to accomplish in life. I do not see it fading away anytime soon.
Secondly, to keep the website running, I will have to take a business approach. Sooner or later I will be charging a reasonable fee for my services. I still haven’t figured out completely how to monetize the website. It may be through providing a subscription service to the screeners, a monthly newsletter or by offering an online course. Nevertheless, I acknowledge that taldavidson.com needs to be monetized.
You see, free services do not nurture the commitment needed by a service provider and service consumer. A deep commitment on both ends is so needed in the realm of investing. In that sense, not only the service provider wishes to be compensated for his vast efforts, but the service consumer wants to pay, as it provides additional assurances that a service will keep on being delivered with adequate quality. People are happy to pay for Netflix not only because it’s legal (vs. pirated content), but because it’s a high-quality service which is here to stay. You know that when you want to watch an episode of “House of Cards” or “Narcos,” it’s there and it’s available, and you don’t have to wonder if you’ll ever find the next episode in a free (pirated) service.
And yet, there are no guarantees in life.
I may have all the best intentions in the world, but life is unexpected. I may fall ill, or need to care for a loved one. Who knows what the future holds?
So I draw inspiration from how Warren Buffett handled closing his first partnership in 1969.
In May 1969, Warren Buffett said he’s running out of good investment ideas. Buffett says he could take some chances and gamble with his investors’ money, but he refuses to do so. Here is what he wrote to his investors:
Quite frankly, in spite of any factors set forth on the earlier pages, I would continue to operate the Partnership in 1970, or even 1971, if I had some really first class ideas. Not because I want to, but simply because I would so much rather end with a good year than a poor one. However, I just don’t see anything available that gives any reasonable hope of delivering such a good year and I have no desire to grope around, hoping to “get lucky” with other people’s money. I am not attuned to this market environment and I don’t want to spoil a decent record by trying to play a game I don’t understand just so I can go out a hero.
Finally, in October 1969, Warren Buffett retired (temporarily) from investing and closed down the Buffett Partnership.
Buffett hooked his investors with his Columbia University classmate, Bill Ruane of Sequoia Fund. He made sure that Ruane takes his investors in, and takes good care of them. Buffett did not leave his investors hanging. He had the integrity to make an effort to ensure succession.
Should I ever need to wind down the website (which I do not intend to), I will either entrust my business with a party that has the integrity to carry it on, or provide my loyal subscribers with a fair alternative. I would guide my readers through the transition, and tell them who they should follow and who is worthy of their trust.
That would be the fair thing to do.
I am honored to have intelligent and successful people spend their time reading my writings and use my algorithm-based screeners. I will do my best to continue and deserve your time and goodwill.
Let’s make our relationship…Long-term.