Howard Lindzon’s key to investing: “The key to investing in general is not to chase”

Howard Lindzon’s key to investing
BY CARMEL DEAMICIS
ON MARCH 20, 2014
If you’re going to take stock market investing tips from anyone in the tech world, Lindzon might be the guy. He’s a Wall Street fanatic who runs a hedge fund and founded two companies in finance — one that was a business news satire show, and the other that is a Twitter-like platform for dishing on the stock market.Sarah Lacy and Lindzon delved into his tips on investing. “The key to investing in general is not to chase,” Lindzon says. He explained that there’s a few rules, the first being to be consistent and place bets wisely. That’s just plain common sense.
But Lindzon’s second rule was a little more surprising. “Don’t fall for the headlines,” Lindzon says. He then claimed he stays far away from the news, and doesn’t follow it. That way, he avoids getting sucked into the hype cycle, which may or may not accurately reflect the value of a company.
“You realize you started a media company?” Lacy challenged him.
“Yeah but I don’t watch news,” Lindzon replied. “The news is a drug. It makes us feel good, it makes us feel bad. What people have to learn when they invest is the news really doesn’t matter.”
Lacy raised the point that emotional tweets about stocks carry just the same weight as emotional news headlines. Lindzon made a joke about not checking his phone — but that doesn’t change the fact that he tweeted today…and yesterday…and the day before that. Lindzon may not follow his own news-avoiding advice.
Despite the fact that Lindzon has built his career on the public market, he admitted that fellow industry leaders feel less inclined to gamble on such stocks. He pointed to Brad Feld, Marc Andreessen, Fred Wilson. “These are men and women who have made tons of money but they avoid the market,” Lindzon says. “Eventually everybody will just get conned back into it.”
He said that in this way — the magnetism of the investment — bull markets are similar to startup investing. “Humans are humans, and right now what’s dangerous about the world — and fun about the world and different about the world — is everyone is connected.” He pointed out that a tweet or a blog post can inspire a reaction in millions of people. That inevitably leads to more volatile markets. “To me, that’s an edge because I understand it,” Lindzon says.

Howard Lindzon on Bloomberg: “It’s hard to charge $2,000 for news when Twitter does it for free.”
BY JAMES ROBINSON
ON MARCH 20, 2014
The world of financial information is changing. Bloomberg is a giant, with annual revenues of $8.5 billion. But it costs $2,000 a month. Twitter is free.
At tonight’s Pando Monthly event in Los Angeles, Stocktwits founder and former CEO Howard Lindzon talked about how his company drew upon an emerging trend of social media and messaging that threatens Bloomberg’s role as the premiere source of information in finance.
In some ways Bloomberg was the original social network for Wall Street bankers. “They’re a $2,000 a month social network,” Lindzon says. “They’re a news organization and a data company and as soon as chat came around, as soon as they realised you could talk to another broker directly that become very valuable.”
Lindzon sees Bloomberg as trying to hold its place swimming against the modern current of information. Blackberry messaging hit big with bankers, he says, allowing them to communicate about the shares they were buying without people looking over their shoulder. “When I saw Twitter I said that’s the exact same thing, except public,” he says.
Stocktwits, which Lindzon founded with Soren Macbeth in 2008, was an attempt to carve out all of the people on Twitter who wanted to talked about stocks and markets online and give it context.
“Stocktwits anybody can talk to anybody. Twitter anybody can talk to anybody,” Lindzon says. But Bloomberg has walled itself off to try and hold its dominance. It’s driven by a separation that is anathema to the spirit of social sharing.
“At Bloomberg, if I pay my $2,000 a month I’m not going to have to deal with the riff-raff of the world, I can just talk to other smart people. That’s the wall that has maintained the Bloomberg throttle.”
Bloomberg has a great business, but Lindzon feels like its best case scenario is stagnation. “You can’t beat Twitter on the news. Bloomberg comes in, I don’t care how many employees they hire, how many reporters around the world, somebody sees something, tweets it,” he says. “It’s hard to charge $2,000 for news when Twitter does it for free.”
Lindzon says that behind closed doors Bloomberg, this has to be something that’s causing considerable anxiety.
“We’ll look back at what happened at Bloomberg. With Facebook, Twitter, was everybody worried at what people were doing? I got to think Bloomberg was shaking in their boots,” Lindzon says.
Bloomberg announced this week that sales were declining in China, it’s second-largest market. Lindzon thinks the abundance of information will curb demand for Bloomberg in emerging markets. “It was a nice business to get $2,000 a month from thousands of banks and thousand of bankers, but I don’t think that’s growing.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

<span>%d</span> bloggers like this: