A reminder of what Pen & Paper is about

A reminder of what Pen & Paper is about

Published on:
March 23, 2019
Written on:

About The Author

Noam Ganel, CFA is the founder of Pen&Paper, a value-oriented, contrary-minded journal of the financial markets. Noam worked as a Vice President in Capital Markets at Silvergate (publicly traded on NYSE under SI since Nov-2019.) At SI, which he joined in 2010, Noam was responsible for advisory services to family offices,  private companies, and financial advisors.

There are many ways to interpret the story of the Golden Calf. Some commentators explain that the story tells us that outside miracles will never internally change us. This is because the story conveys how the Israelites returned to idolatry, while forty days earlier, they miraculously saw the Sea of Reeds (Yam Suph in Hebrew) split. Only we have the freedom to control our thoughts, feelings and actions in this world.

Other commentators view the Golden Calf as a story against charismatic leaders. While Moses was among the people of Israel, advising and comforting them, they followed his path and adhered to his word. But as soon as he left the scene by climbing Mount Sinai, they reverted to old habits and worshipped material goods. The lesson here is that social civility, how we treat one another, is what matters, not strong leaders.

And there are those that read the text as is. They understand the story simply as a reminder that worshipping material goods is morally wrong. In their view, this is the earliest apologia against consumerism, which many Jewish scholars are against. In Rabbi Jonathan Sacks own words, “Consumerism has become the new religion. Its cathedrals are shopping centers, its most heinous sins are not having this year’s model and it promises ‘retail therapy’ salvation by shopping and remission of sins by credit cards.”

Hence there are different ways to understand stories. Lately I’ve received emails from readers that, it seems to me, read my essays so that they can earn a quick buck. Even worse, I find that they think that the blog’s purpose is money-driven. Nothing could be further from the truth. To me, buying stocks to gain money in the short term is an awful approach to investing - it is bound to lead to opposite results.

My purpose in this week's meditation is to clarify to readers why I founded Pen & Paper by describing its four underlying themes.

Art canvas

Pen & Paper is my art. To me, there is beauty in logically thinking and in writing thoughts. In these weekly essays, I try to capture a sentiment that I feel is worthwhile sharing. And just as an art canvas has many colors to reflect on, repeat readers of this website know that the topics of discussion here are wide and diverse - from personal wealth to buying and selling individual stocks; from general finance concepts (such as return on invested capital) to niche investment areas (such as mortgage servicing rights.)

Did you know that the Pythagorean theorem can be solved in over 300 different ways? There are as many different approaches to stock investing. Some investors focus on chart movements (the Technicians); others look for a growth trend in earnings (the Momentums); others may strictly focus on yield investments (the Fixed income) and others, typically with an affinity for math, concentrate on esoteric financial engineering, such as derivative and option trading (the Quants). And so, the investment principles behind Pen & Paper are just one voice in a sea of investments.  

Digital record

Because I find it impossible to remember my thoughts, I use the website to articulate to my future self why I bought a specific stock in the first place. By putting thoughts to digital paper, I record my investment thesis.  

Reading about past investments is one of the best ways to become a better investor. From my goofy investment in Rait Financial Trust, I learned the importance of adjusting for preferred equity. From my hasty investment in Orchid Paper, I understood the risks a company takes when it has only four customers. And as important as the lessons are, they also serve as a reminder to be humble.

Two years ago my annual return was greater than 40%. So, I started to cut corners and glanced - instead of carefully analyzed – at the companies I was buying. Evidently, the business surprises, the information that I could easily access but ignored led to losses. So, keeping a digital record could also be understood as a humility tracker.    

Business card

Instead of presenting myself as a title alongside a company's logo, I use Pen & Paper as my business card where people can read about my attitude to investments. I find that the essays perform a better job of describing my approach to stocks and my principles as an investor.

The website allows the reader to understand my whole portfolio of stocks, not just specific stocks that I purchased. “Since we are wrong at least a third of time,” said the legendary investor John Templeton. I'd hate that you randomly picked the articles about the stocks that I got wrong.

Educational for others

Sharing my personal journey in investments may serve as an educational resource to you. To wisely invest in stocks, you will need more than math skills. By reading these essays you will not only learn some of the math skills needed, but also some of the psychological tools to use.  

There are many websites that show a successful track record. But what worked in investing a year ago typically will not work today. Besides, you must wonder, why would anyone want to share you with profits?

What Pen & Paper is not      

This website will not make you rich. You will not find articles with titles such as, "All you need to know about the stock market." You will not find call to actions or articles with the title, “Buy the stock of company ABC because it will double in a year." You will also not personally hear from me. I do not manage other people’s money, nor provide financial advice.

I manage my own portfolio of stocks and live my life as written in Psalm 128:2 2: "Who is rich? He who rejoices in his portion."

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