Why I Write: A Reminder of Purpose

By Dr. Duru written for One-Twenty

March 2, 2008

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A friend of mine recently responded to one of my missives asking why don't I just tell my audience what to do. I responded by saying that is for him to decide. I am just supplying information through "One-Twenty." After a few more days, I realized that I am long overdue for a review of why I bother writing this blog.

I can first say what One-Twenty is NOT. This is not an investment newsletter. I do not provide stock picks insisting that I know better than you know how to make money. I will from time-to-time highlight stocks and tell stories using certain stocks as themes. But I always recommend you do your own research and make your own decisions before buying or shorting anything. Why do I take this approach? I write One-Twenty as a hobby and not as a job, so I write when I get the inspiration and not after every single critical and meaningful event. Moreover, since I have a "real job," I often do not even have the time to write when I want to! This means that I cannot give the audience the timely and up-to-the-minute advice required for stock-picking and trading. To make stock advice work well, a writer must provide constant and timely updates on his thinking and trades. Additionally, the audience must be dedicated and disciplined enough to read every article or pay attention to every email alert. For longer-term themes, intermittent writing works fine, so I tend to stick to macro-level topics. I am opportunistic in my use of stock picks and commentary on current events to add a little more spice to the pages. Most importantly, I cannot know or anticipate the unique and individual investing needs, planning horizons, and/or risk tolerances of the audience. I can only speak to how I think and what I would do. I must leave it up to you to decide whether my ramblings also make sense for you or some small corner of your portfolio. (For example, see my disclaimer here.)

My last missive is a great example of the problem I would face if I tried to run a stock-picking service. I tried to give an update on the various stocks I have mentioned over the past month or so. First, I realized that I missed a few (like U.S. Steel and the homebuilder ETF, XHB). Then, just after one more day of trading, some of these stocks developed new and ominous technical patterns. And if in the coming few weeks the market finally violates January's lows, I may have to completely reverse my opinion on my bullish picks and reinforce my opinion on my bearish picks. But I cannot know ahead of time that I will be able to do all this the very moment I make up my mind or when my mind changes. I get a kick out of watching shows like "Mad Money" or "Fast Money" try to deal with this problem. These shows broadcast for an hour every single trading day, and yet even they can only do a partial job of keeping the audience up-to-date around a select few themes and stock picks.

Perhaps one day when the stock market can pay the bills around here, I can obtain the time and luxuries for telling you what to do. In the meantime, I enjoy the opportunities I get to write and share my thoughts. I am also grateful for the handful of ad revenue I collect to pay for this web site and pay for the occasional new book or two. And I am of course deeply appreciative of the small collection of loyal readers I have out there!

Finally, taking you on a quick trip through the history of this site will give you a better sense for my purpose here on One-Twenty. When the tech bubble collapsed back in 2000, it essentially wiped out all the great gains I had made in the stock market in the 1990s. But I felt fortunate because I knew a lot of people who lost all of their savings and more in that debacle. As the bear market deepened, I became increasingly annoyed and alarmed by all the pundits who kept feeding the public the same tired "buy and hold" mantra and conventional wisdom abut what history says the stock market will do because of this and such-and-such. Relentless bulls and automatic analysts kept declaring every dip a buying opportunity and every false rally a sign that a bottom had finally come. I learned very quickly just how much I did not understand about the stock market and its players, and I knew that too many people in my circle shared the same blindness. After reading the "The Coming Internet Depression" by Michael Mandel, my mission for One-Twenty was set...

To counteract the broken conventional thinking, I sent emails to families and friends that provided alternative opinions. They were typically alarmist and always bearish. My paternal grandfather died the weekend before 9/11 and then my father had a stroke shortly thereafter. During those days, it felt like the financial markets were the least of our problems, and I considered ending my emails. It also seemed that more and more folks were finally providing alternative views that would help people cope with the bear market. But I quickly remembered that I found writing to be a nice release for my swell of rampant thoughts and heated opinions. The writing also provided a great record of the development of my thinking. It was also around this time when I reconnected with "TraderMike," and old friend from Stanford University, and he reinvigorated my interest in the stock market. I will never be the star trader that he is, but at least he helped save me from a lot of mistakes. (=smiles=)

For another two years, I continued to pelt my family and friends with emails, until I finally decided to move the writing onto my website. I knew that few people in my circle cared as much as about the financial news as I did, so posting on a website would clear up email boxes and still allow the truly interested to keep up with me. This happened in late 2003, and the stock market was finally back on the rise from a dismal and horrific bottoming process from July, 2002 to March, 2003. You can imagine that given my negativity, it took me some time to fully get on board with the bullish program. My year was only saved by dabbling in a bunch of "bio-wrecks": biotechnology companies whose stocks had been beaten senseless by various setbacks. When insiders started purchasing these stocks, I hopped on for the ride.

For the past 4 1/2 years, I have slowly but surely become more sophisticated about the Web and all its publishing possibilities. For example, my sister-in-law help me redesign the entire Dr. Duru website. I implemented a blog format for One-Twenty (much to TraderMike's chagrin, I STILL don't have a real blog platform installed!). I included ads on my site from Google AdSense. I got my "Dr. Duru" trademark officially registered and all legal-like. And recently I finally got with the FeedBurner program. During this time, the offerings for financial information on TV and, more importantly, the Web have also expanded tremendously. Some of it is truly inspirational. Various communities have grown up around various financial topics. I find myself reveling in it all and feel like that I have found a circle of interest that in turn continues to feed my passion for this stuff. I have responded to requests for book reviews and have been a part of many fascinating conversations.

So, today, we find ourselves teetering on the precipice of a new bear market and staring down a financial disaster that could be much greater than the one we faced down in 2000 and 2001. CNBC's latest Wealth in America survey finds Americans getting bearish on all things financial again. The Federal Reserve and the U.S. government acted in concert with other governments and central banks to soften the pain from the recession earlier this decade. But it looks like they have primarily delayed the final purges of excess that we need to accomplish before establishing more stable financial institutions and systems. In the meantime, a select few people have profited enormously from promoting bubbles and pushing exotic securities and trading instruments. They have also taken care to build moats ahead of whatever financial storms still await. Another select group of folks have been able to sieze the opportunities and make a pretty decent go of it. The rest of us will need to manage the best we can. Going forward I plan to continue to strike a balance between making One-Twenty scream out plans for disaster preparedness and making these missives a beacon of opportunity.

Finally, I encourage you to email me or post any ideas for this site.

Chiru and be careful out there...!

DR. DURU®, 2008