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:
  • Business owners
  • Affluent families and individuals
  • Corporate executives
  • Family offices
  • Endowments and foundations
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Un-Berra-ble Burden

I've noticed that a lot of these monthly missives have a connection to sports. Maybe it's because sports are a competitive endeavor, just like investing. I see things from the sporting world and notice a relationship with the world of investments. Maybe it's just me.
Yogi Berra was a legendary baseball player for the New York Yankees. It's tough for me to write about the Yankees. I can't stand them. Their pinstripe suits make me ill. Why? They win too much. I'm jealous. So what. Anyway, Yogi was an 18-time All-Star catcher who appeared in 14 World Series and won 10 of them. See what I mean, they win too much.
Yogi was also famous for what came out of his mouth. His quotes are legendary. Such gems included "When you come to a fork in the road, take it." "You better cut the pizza in four pieces because I'm not hungry enough to eat six." Or, "It ain't over until it's over." Or this classic, "It's like déjà vu all over again." There are many more worth reading. Just do a Google search for Yogi Berra quotes.
I recently came across another of Yogi's quotes. "Nobody goes there anymore, it's too crowded."   Which got me to thinking. Right now, we're in the middle of our own season. We call it Annual Report season. Not familiar with this sport? It's not physically demanding but it is competitive. It involves sitting down and reading a mound of corporate annual reports that are published every year by publicly-traded companies. Each year my partner Dave Hutchison and I read around 400 of these corporate thrillers. If it takes one hour to read each report, that's 400 hours per year. Assuming an 8-hour day that's 50 days, which translates to 10 weeks per year of nonstop reading. A lot.

Some investment professionals believe that reading annual reports is a complete waste of time. The logic goes like this: the stock market is efficient in the sense that new information is quickly incorporated into stock prices. Therefore, as soon as annual reports are published, stock market investors collectively digest the information. Stock prices quickly and magically adjust to the correct level. Since the "market" does the work, why bother reading these darn things? Who needs the burden? Aren't there better things to focus on?
To us, this logic is classic Yogi Berra logic. Nobody goes there anymore, it's too crowded. Nobody reads annual reports any longer, it's not valuable information and won't improve investment decisions. Let me see if I understand this. If no one is reading annual reports--of course some investors read, but fewer do these days--then how can the market evaluate and properly value companies? Index investing and Exchange Traded Funds--ETFs--only exacerbate the problem as these investors just buy an index or ETF and often don't fully understand what's in the wrapper.
In my view, it's the equivalent of shopping for food without reading the labels. You might be okay. Or, you might be ingesting Sodium Benzoate, Butylated Hydroxyanisole or his cousin Butylated Hydroxytoluene. Or, perhaps a dash of Sodium Nitrate. Over time, you might end up with a nasty case of investment indigestion, or worse.
We believe the road to investment success is paved with non-stop reading and learning. The world changes daily, and you'd better understand where the landmines and locusts are. Especially when other investors leave the hard work to a select few. The opportunity for mistakes increases when we outsource the hard work to others.

-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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