During his recent interview with Tobias, Mike Puangmalai, owner of The NonGaap Newsletter discussed Sexing Chicks And World War 2 Spotting. Here’s an excerpt from the interview:
Tobias: It’s just that it’s too subtle to articulate. With sexing chicks, you can’t tell somebody what to look for. They just have to guess on the first few and then after a while, the apprentice understands, with the master standing over their shoulder, saying that was wrong, that was right, that was wrong, that was right. After a while, they can understand what it is they’re doing and they’re getting it right more often than not, even if they still can’t articulate what it is that is the difference between one than the other. I just thought it’s a fascinating example.
Mike: Yeah. I think at a certain point– and this is where when people ask, “Well, how can I get better at this?” It’s like, “Well, what industries are you comfortable with?” “Okay, we’ll start there and start looking at those compensation programs.” Over time, you’ll start to connect how you’re familiar with the strategy in the business with how they’re compensating people and then you start picking up different nuances like, “Oh, yeah, the stock is struggling because there’s expectations– demand is going down,” but all of a sudden, they move grants up six months, and it’s like, “Why would you move grants up six months on compensation? I thought demand is weak.” And then you realize, “No, the stock is pricing [unintelligible [00:27:51] demand is weak. They just told you that–”
Tobias: There’s something coming.
Mike: Yeah, there’s is something probably not as weak as you think. So, you bring it together. In hindsight and after the fact, it’s easy to explain with the hope that, okay, eventually you can start picking this stuff up in real-time because if you do it correctly– and this has been true, even as I openly talk about this stuff, for whatever reason, it’s still true, you will find situations where stocks will just pop 10%, 20%, 40%, 50% on this sort of stuff. It’s hard to take a systematic approach to it, at least for me, but you get a hint. You identify a handful of those situations every year. I think it’s fair to say your portfolio is going to do fine.
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