Welcome!

I’m Adrian Tout…

Whilst I’m not a fan of long-winded bios – it’s only fair you should know a little more about me (and why this blog).

My educational background is in fields of computing science and engineering – which finds me working at Google.

However this newsletter is written out of a genuine love for all things learning, making better decisions, business, analysis, investment, psychology, economics and free markets.

The blog is now in its 13th year (2024)

It’s written to help you make better financial decisions. And to that end, I think author Peter Bevelin, put it best:

“I don’t want to be a great problem solver. I want to avoid problems—prevent them from happening and doing it right from the beginning.”

I’ve been at this game of investing for just over 27 years.

Needless to say, I didn’t get it right from the beginning.

At the ‘bulletproof’ age of around 30 – I lost around $200K during the dot.com crash. It felt like a lot of money at the time. But it was enormously helpful.

I learned from some important (life-long) mistakes early in my investing career. And as I navigated my way through the recession of 2008/09 – I was able to learn a bit more.

For example, during 2022 I outperformed the S&P 500 by almost 20%.

And last year (2023) – I was only a couple of percent below the market. 

Put together – my outperformance over the past couple of years was 19%.

Two things:

(1) I hedged when the risk/reward was low; and
(2) I increased my exposure when the odds were in my favour (e.g. with the S&P 500 closer to 3600 or ~16x forward earnings)

That’s the game.

By contrast, many fund managers lost money through 2022 due to poor management of risk. For example, at the beginning of 2022 – this will be a year of making ‘fewer mistakes’.

My Performance vs S&P 500 for Calendar 2022

With respect to 2023 – many fund managers were overly concerned about a recession – and failed to have adequate exposure to take advantage of the  20%+ rally.

In other words, they got it wrong both years.

My Performance vs S&P 500 for Calendar 2023

But this is not an easy game.

It’s take time, focus and deliberate practice. 

I like to say that both traders and/or investors will pay at least one of the following with this endeavour:

1. time spent learning the game of speculation; and/or
2. capital losses

Some of you may avoid #2 – but you cannot avoid #1. 

There are no shortcuts and no get-rich-quick schemes. There’s no magic formula which will promise you success.

The only way you will learn is by making mistakes.

Over time you build a process (a mental model) of making better decisions. And from there (if done well) you tend to make fewer mistakes.

When it comes to the game of asset speculation – making fewer mistakes far outweighs taking big risks. 

There are old traders. And there are bold traders. But there are very few old bold traders. 

Below are the four primary objectives I aim to achieve with this free newsletter:

• Making better financial decisions based on what’s worked for me over the past 25+ years;
• Eliminating the noise and misinformation which accompanies markets day-to-day;
• Asking better questions that are often overlooked or assumed; and finally
• Support any thesis with facts and data. Anything outside something that is factual is nothing more than a thesis (or your story).

Probabilities suggest your interpretation of facts and data will not turn out the way you expect. 

And that’s more than fine…

Successful investing requires accepting we get things wrong along the way. It also requires a long-term mindset – where we manage our emotions and risks.

This blog details how I do that…

cheers
adrian