Last Monday I alerted you to a new addition to the Angel Research team. Well today, I’m pleased to introduce you to that addition, Justice Litle.
Justice comes to us from where many at Angel got their start in financial writing, Agora Financial. At Agora, he was the editor of Outstanding Investments, which has been a top-ranked investment newsletter by Hulbert for the last 2 years.
As an aside, Outstanding Investments is the letter Mike Schaefer started in the early 1990s, then sold to Agora in 1998. Certainly there’s a hidden meaning in there somewhere, right?
Please join me in welcoming Justice to the team.
– Brian Hicks
Dear Energy and Capital Reader,
It’s excellent to be here. Thanks for having me.
You might (or might not) know me as the senior editor of Outstanding Investments – a natural resource newsletter that made Hulbert’s top dog list the past two years in a row.
During my time at OI, I brought readers big winners like International Uranium (now Denison Mines), up just under 200% as of this writing; Silver Standard Resources, up more than 150% from entry as of the Feb 21st close; and Jacobs Engineering, currently up 55% from our buy-in price.
Many more of my OI picks – like Yamana Gold, Covanta Energy, and Goldcorp for example – are up anywhere from 43% to 68% as of this writing, with excellent potential for multi-bagger gains in the years to come.
Of course, my mission was (and still is) much more than just picking stocks.
It’s always been my goal to dig deeper and get behind the news. To deliver the real story, no holds barred, and help readers make sense of it. Macroeconomics, technology, strategy, geopolitics . . . in my time at OI, we covered it all.
In the past two years I’ve served up key themes like gold’s role in the 21st century . . . the inevitable Austrian endgame . . . infrastructure arbitrage . . . punctuated bubbleibrium . . . digital feudalism . . . the hidden ramifications of peak oil . . . the new cold war . . . the doctrine of financial MADness (mutually assured destruction) . . . and more.
Experience has taught me that forecasting the shape of future events isn’t some dark art. It’s a matter of gathering as much information as you can, thinking objectively and creatively, and staying ahead of the crowd.
I’ve been successful enough at this for a few folks to notice. Columnist Peter Brimelow of Marketwatch, for example, recently dubbed me a "prophet." (Don’t worry, it hasn’t gone to my head.)
My time with Outstanding Investments was great. I’ll treasure the memories – and the many wonderful subscribers I met via emails and conferences these past few years.
(By the way, to those OI readers wondering where I went . . . hello again!)
Anyhow, now it’s time to focus on the present. And the past was just a warm-up in comparison to what’s ahead.
I’m excited to be a part of the Energy and Capital team because, like me, these guys think big. REALLY big. They are giving me the opportunity to implement a vision many years in the making . . . to fulfill a dream. (No prophet jokes, please.)
What I’m talking about here – and don’t worry, you’ll get more details in a minute – is more of a journey than a destination.
It has the potential to be a profitable journey indeed – perhaps amazingly so. Not just in financial terms, but intellectually and philosophically, too.
It’s a journey we can make together, and I hope you’ll be coming with me.
But, before I ask you to break out the knapsack and traveling shoes, I suppose I should explain a little more of just what the heck I’m talking about. That will require a little background.
A Little Background
Let’s begin at the beginning, shall we?
My adventures in journalism began at age eight, courtesy of an IBM typewriter and a well-lit shoe closet at grandma’s house . . .
Hold on, that’s too far back. Let me try again.
I studied literature and philosophy at a tiny little Presbyterian liberal arts college. I also spent a few years studying abroad, in places like Oxford University (Oxford, England); Palacky University (Olomouc, Czech Republic); and Macquarie University (Sydney, Australia).
My original plan was to get a PhD and settle into the academic life. I wanted to be the type of professor who inspires his students – "O Captain, My Captain" and all that – and writes books in the summers.
That all changed forever when I came across The Investment Biker by Jim Rogers, a tale of macro investing around the world by way of motorcycle. The idea of making money by thinking – putting the puzzle pieces together – was so immediately gripping I could no longer imagine doing anything else.
From that point on, academia went out the window. Markets were my destiny. I read everything I could get my hands on, from The General Theory to Reminiscences of a Stock Operator. (I have easily read hundreds of books on investing and trading since then, and continue to read at least twenty new books a year. For a while I was a top 1,000 reviewer on Amazon – more on that later.)
Fresh out of school I took a job at Commodity Resource Corp., working with traders on every continent but Antarctica. In my three years as a commodities broker, I dealt with everything from soybean farmers to cattle ranchers to currency hedgers to scrap metal dealers (and all points in between). In helping my clients devise and execute trading strategies, I got a close look at most every methodology under the sun – including the ones that didn’t work. I did an extensive study of the trend-following methodology, and wound up making contributions to the book Trend Following: How Traders Make Millions in Up or Down Markets. My best client was a Russian hedge fund.
Hungry to broaden my horizons, I eventually left the commodities brokerage biz to start an equity trading partnership – just in time for one of the most rough-and-tumble stock market years in history, 2002. Nonetheless, the trading partnership progressed until my lead investor decided to pull his funds and put them in a land deal. (Given the real-estate boom that followed, I can hardly fault his timing.)
From there I took a temporary side road into consulting, continuing to fine-tune my investing and trading methodologies all the while. Through a combination of good fortune and good timing, I eventually found myself at the helm of Outstanding Investments – and now, after an excellent run with OI, that same combination has brought me here.
Now that the background is filled in, let’s get back to that vision.
The Consilient Approach
Over the course of my travels thus far, I have come across more life-enriching and knowledge-enhancing books than I can count. But only a few have had such a profound impact as to change my perception of the world – and to deeply affect my sense of purpose.
One of those books was Consilience, by noted biologist Edward O. Wilson.
The American Heritage Dictionary defines "consilience" as "the agreement of two or more inductions drawn from different sets of data." Consilience is more loosely defined as "a jumping together."
In his book of that title, published in 1998, Wilson lays the groundwork for a wildly ambitious quest: pursuing the unity of knowledge. More specifically, uniting all branches of knowledge under the banner of the natural sciences.
In a nutshell, there are too many knowledge gaps between the disciplines. These gaps create air pockets of ignorance that need to be ironed out. Because, say, economists and biologists and physicists aren’t much good at talking to each other, valuable cross-applications are lost in the gaps. By encouraging a "jumping together" of the various branches, the gaps can slowly be filled in – resulting in a unified whole that is far more valuable than the sum of its parts.
As I inhaled Wilson’s vision a few years back, it struck me that I was on a similar quest: uniting all branches of market discipline under the banner of maximum profit!
In honor of that realization – and in homage to the power of Wilson’s ideas – I like to think of my unorthodox market path as the "consilient approach" to trading and investing.
One can certainly see a "jumping together" of experiences these past few years. Consider: I cut my teeth in the Wild West commodities markets, trading everything from cattle to currencies to cocoa; then moved on to equities trading; and then immersed myself in the fine arts of top-down macro, bottom-up stock picking, and value investing. And, of course, I am still growing and expanding my horizons to this day.
Over the past decade, I have conversed with some of the very best traders in the world – guys with track records so astounding they are hard to believe. I have also absorbed direct lessons from some of the savviest investors in the world – managers who run hundreds of millions, or even billions, in a variety of styles.
Trend following . . . swing trading . . . arbitrage . . . macro . . . value . . . growth . . . all have great intrinsic worth, and all offer great opportunities for cross-pollination.
Wall Street is accustomed to separating these approaches, putting them in their various style boxes, and leaving it at that. Sometimes your style box works well and sometimes it doesn’t. Sometimes the sun shines and sometimes it rains. Shrug.
But the consilient approach says, "Why be confined to a box?"
Instead, why not adapt to terrain changes by cultivating as much versatility as possible? In terms of latent potential, the human brain is the most powerful thing in the history of the universe . . . and the defining attribute of the brain is its incredible plasticity. As Robert Heinlein once observed,
"A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects."
Warren Buffett leaned in this direction when he said his dealings as a businessman make him a better investor, and vice versa. Can’t this be true, then, of the various trading and investing disciplines?
It seems obvious in hindsight. So why, then, do so many Wall Streeters have one-dimensional mentalities? Why do style boxes dominate?
The unspoken answer is that the majority of market professionals spend their lives focused on one discipline, one conceptual approach. Many of them get pigeon-holed by investment allocation committees – pinned down by a checkmark. Others become prisoners of their comfort zone, hesitant to risk looking foolish in pursuit of new skills. Keynes’s wry observation still rings true: on Wall Street it is better to fail conventionally than succeed unconventionally.
On top of that, most professionals spend their time hanging out with others who think exactly the same way they do. Value guys generally don’t mix with macro guys. Investors don’t hang out with traders. Fundamentalists are typically at odds with technical analysis types. And so on.
As a result of this reinforced partitioning, an all-too-human tribe mentality sets in. The tribe mentality dominates most investing and trading disciplines, just as it still dominates academic and scientific disciplines. (My time at Oxford opened my eyes to how amazingly petty academia can be; I later came to realize Wall Street is just as bad.) "My way or the highway" is a widely expressed sentiment – as if there were only one path up the mountain rather than many. Dismissing, belittling, or otherwise mischaracterizing the value of "other" approaches is incredibly common. And incredibly sad.
The consilient approach differs in that it embraces diversity from the start. It brings access to multiple strategies, multiple channels of thought. This versatility is beneficial when faced with the challenges of a shifting landscape; the wider the variety of environments one can thrive in, the more time will be spent thriving on the whole.
Furthermore, the consilient approach is deeply rooted in a passion for 360-degree understanding. The emphasis is not just on what works, but on discovering how and why it works. This requires ongoing cross-pollination from conventionally disparate fields of inquiry.
As Paul Tudor Jones (perhaps the best trader ever, next to Jesse Livermore) has said: "The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge." Jones’s words hold true from an investment perspective, too. The value of knowledge applies across all time frames.
And so now I unveil to you: Consilient Investor.
What is Consilient Investor? How to describe it? Let’s see. Consilient Investor is:
- A market mindset and philosophical approach. As just described above.
- A "deep content" website focused on investing and trading. I have been applying the consilient perspective to investing and trading for many years now. (Another term you’ll be hearing more of is "latticework," a closely related concept.) Much of my work in this area has never been published. Much more of it is spread out, scattered to the four winds in journals and message boards. There are also dozens of trading and investing book reviews once domiciled on Amazon but since removed. All that food for thought will be organized, updated and linked together in one place: consilientinvestor.com. My cup of knowledge will be poured out to you. And of course, it is still in the early days… so there is much more to come. Hopefully a vibrant community will arise, and you can be a part of it.
- An unconventional investment newsletter. Let’s not forget about making money. The Consilient Investor newsletter – to be unveiled in the weeks ahead – will bring you excellent money-making ideas with a long-term investment focus. At Outstanding Investments I focused on natural resources, global infrastructure and precious metals. We won’t miss out on those lucrative areas by any means… nor will we be confined to that space. Versatility will serve us well: through the use of LEAPs and long-dated put options, Consilient Investor will have the ability to go short as well as long. (This seems only rational in light of current frothy conditions.) Furthermore, CI will be able to take advantage of unconventional macro-oriented opportunities – like a little-known investment fund, for example, that is designed to profit in the event of a credit derivatives meltdown.
But hold on, some of you say.
Consilient Investor sounds great, but what about trading? Didn’t you mention trading as part of your mix?
Indeed I did. Trading is in my DNA. Sometimes it seems I could no more quit trading than quit breathing. So once again, the consilient approach applies in ALL timeframes, from years and months down to weeks and days. (We’ll leave the intraday stuff to program traders and quantitative finance guys.)
In the days ahead we’ll cover many topics near and dear to a trader’s heart: volatility, money management, portfolio management, market selection, trade selection, FA, TA, psychology and more. We’ll even have a series on the deep similarities between trading and poker. It’s going be great.
What’s more – it’s a tad early to reveal this, but . . . last year I unveiled an aggressive trading service to an exclusive group of readers. Because the service was so unique, it was run as a "beta test" – kind of like an experimental aircraft – and wasn’t made available to the public. The run was very successful, but for logistical reasons the service is still under wraps. That will eventually change.
So all in all, that’s the scoop. Exciting, huh? I think so. These ideas have been a long time coming.
Once again, it’s great to be here – and I look forward to writing you regularly from here on out.
I’ll do my best to make you think, occasionally make you laugh, and of course try to help you make money. It should be fun.
Warm regards,
Justice
