The Triad Perspective

Triad Investment Management, LLC is a SEC-registered investment adviser based in Newport Beach, California.  We manage portfolios, including retirement and corporate accounts, and provide investment counsel to our select group of clients, which include:
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Broken Record

" You're a broken record!"  Most of us have heard the phrase.  What does it mean?  If you're under 40, you might not know first-hand where it came from - but I do.
When I was a teenager, the record player's needle would occasionally get stuck in the same record groove.  The culprit was usually a scratch, or some foreign object.  The lyrics would repeat until I went over, picked up the needle and dropped it back down.  It used to be a lot harder to play music!  Technically, the record wasn't broken but was stuck in the same groove.
So, the phrase " broken record" means to endlessly repeat the same message.  We all know people like this.  Friends. Relatives. Coworkers. Politicians.  Some Religious figures.  You wonder if these people have any idea how repetitive they are.  Some are oblivious, while others are just very, very determined to get their message across.
We believe that successful investing requires more behavior than brains.  As Warren Buffett observed, if you have 160 I.Q. points, you could sell 30 of them to someone else because you probably don't need them to be a successful investor.  Temperament is key.
John Maynard Keynes famously remarked, " the market can remain irrational longer than you can remain solvent."  It's our job during these periods to state our case.  And to keep stating our case, as long as there is a case to state.  The problem with all of this is the perception that you have become a "broken record", never veering from the same old script.

If your facts and reasoning are correct, the proper course of action is to do nothing.  Hold your fire.  Don't make any changes.  Wait for Mr. Market to come to his senses.
And stick to your discipline, especially when markets are saying "you're dead wrong", every day for days, weeks, months.  Even years, in some cases.  Resisting crowd behavior when the crowd appears to be wrong-late 1990's internet bubble, real estate bubble of 2005-2008-is difficult but offers the opportunity to avoid permanent losses and reap the rewards of independent thinking.
There's a big exception to this - being a broken record when you are actually wrong.  The right behavior is important, but it's equally vital to invest based upon facts, not opinions.  
The challenge to focus on facts is compounded by human neural wiring and our susceptibility to " confirmation bias" - the tendency to search for, interpret or recall information which confirms preexisting beliefs, to the exclusion of conflicting viewpoints. A deadly investment sin to commit.
How do you ward off these mental short-circuits?  Start with an internal debate and self-examination.  Apply as much rationality and objectivity as possible.   Am I looking at this investment with blinders on?  Are the facts on my side?  Has new information invalidated my previous beliefs?  Am I filtering every new piece of information through a biased filter that fits my preexisting views?  Despite my best efforts to reject my own reasoning, does this idea survive negative scenarios?
After this, if the facts are on your side-and you have a thick skin to resist the effects of crowd psychology-go ahead and stick to the same narrative, the so-called " broken record" approach.
A quick internet search reveals a bunch of "Broken Record" songs (most of which aren't available on vinyl) by artists I've never heard of.  Krewella? Tessa Violet? Shakira (ok, I've heard the name).  And, who's ever heard of Your Demise, a 1990's punk band?  Yeah, I know...pretty much no one.
As for investing, it's important to distinguish between the " broken record" that won't change despite the need to, and the real deal, offering important, if somewhat repetitive information.  Understanding the difference can help you avoid the financial equivalent of Your Demise.

-John Heldman, CFA

Past performance does not guarantee future results.  Results are presented net of fees and include the reinvestment of all income.  The opinions expressed herein are those of Triad Investment Management, LLC and are subject to change without notice. Consider the investment objectives, risks and expenses before investing. The information in this presentation should not be considered as a recommendation to buy or sell any particular security and should not be considered as investment advice of any kind. You should not assume that any securities discussed in this report are or will be profitable, or that recommendations we make in the future will be profitable or equal the performance of any securities discussed in this presentation. The report is based on data obtained from sources believed to be reliable but is not guaranteed as being accurate and does not purport to be a complete summary of the available data. Recommendations for the past twelve months are available upon request. In addition to clients, partners and employees or their family members may have a position in any securities mentioned herein. Triad Investment Management, LLC is a SEC-registered investment adviser. More information about us is included in our SEC Form ADV Part 2, which is available upon request.  

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