Dare I Look in the Mirror?
Below is an email I received in response to my newsletter from last week (in Dutch).
Translated:
1 Question, how can you sell this while the s&p has a 30% gain. Doubling of zero is still zero?
Maybe look in the mirror, you are doing more harm than good if your return this year is negative..
Messages like this reflect current sentiment. When people become vocal about how foolish or harmful I supposedly am, it tends to be a strong counter-indicator.
But let me review his points.
How can you sell this when the S&P is up 30%?
To inexperienced investors? Not at all.
To experienced investors who understand that markets move in cycles, often with exaggerations in both directions? Absolutely.
Would I also prefer to celebrate a 30% gain right now? Of course.
I’m probably being too open and honest about the current state of things. This newsletter isn’t yet attracting enough paying subscribers to justify the effort it requires or to support my family. If money were my sole motivation, Valuing Dutchman (Smart Capital in Dutch) would’ve ceased to exist long ago. Other offers have come my way—even within the past month.
On top of that, our investment fund operates with zero management fees. We only earn compensation if we achieve a minimum return of 6% above the high watermark.
For the past three years, we haven’t reached the peak we achieved at the end of 2021. In other words, there’s been no income from that source for three years.
Almost all my liquid assets (aside from a small buffer to weather times like these) are invested in the fund, which follows the Valuing Dutchman strategy. In other words, I’m tripling down on this investment approach—that’s how much confidence I have in it.
As I’ve mentioned before, I am first and foremost an investor, not a stock newsletter publisher. With 25 years of investing experience and nearly 14 years of writing about stocks, I know the trends I could tap into to quadruple or even quintuple my readership.
So how can I sell this?
Because I save investors who share my vision a great deal of time and effort—from sourcing ideas to meticulously monitoring positions from buy to sell.
Let’s do the math: at €249 for a subscription, you pay just €0.10 per hour gross for an analyst with decades of experience and a proven public track record.
A doubling of zero remains zero. However, a 30% gain on zero is also zero.
The Doubler portfolio started with €50,000. A doubling brings the portfolio to €100,000. A 0% return keeps it at €50,000. Thankfully, we’re not multiplying by zero.
Looking in the Mirror
This comment immediately revealed that the sender isn’t a regular reader of the newsletter.
In my opinion, too much time has already been spent this past year on "looking in the mirror" and evaluating whether our investment style is still relevant today. Time that could’ve been better spent researching companies.
There’s always room for self-reflection, and we’ve addressed your questions in great detail. Some articles that immediately come to mind include:
I now draw on more than 20 years of experience as a value investor. Despite this weak three-year period, I’m still outperforming the S&P 500 over 20 years, with an average annual compound growth of just over 11%.
This isn’t my first weak period, but as I wrote recently, this one feels emotionally harder than the previous ones.
The only reason someone can send me an email like this is because I do reflect on myself and am open and honest about the state of affairs. Otherwise, they wouldn’t even know.
If I were focused purely on selling the newsletter, I would only highlight the 11 positions we’ve sold this year, 8 of which were profitable.
I’d write about Cloetta, with its 40% gain in five months, or KoneCranes, with its 39.5% gain in six months.
I could also emphasize the holding companies in our selection, all of which are in the green, partly thanks to additional purchases over the years.
Of the 23 stocks in our current selection, most are profitable. Some, however, have lower gains today than they did a year ago. Were we foolish not to sell? Only time will tell.
For now, I still see these companies producing solid to good results. Their low valuations today are mainly driven by negative sentiment around Europe and widespread disinterest in this type of stock.
Will this turn around?
Yes, I am convinced it will. As I wrote earlier, I’m heavily invested in this belief. When exactly it will happen, I can’t predict. Launching the Doubler Portfolio was already a clear statement of my conviction.
“You’re Doing More Harm Than Good”
A statement like this stings because I’ve spent nearly 14 years helping people invest through my articles and analyses. I’ve always prioritized the interests of our portfolios, never solely the sale of the newsletter, nor by promoting small stocks I had already purchased (front-running or pump-and-dump schemes).
There have been great periods for our investment style in the past, and I firmly believe that a rational approach can make a difference now more than ever.
The results of these 14 years are publicly available on the website:
It’s not popular today to warn about market excesses, to admit when you’re wrong, or to focus on underperformers.
Let me be clear: this isn’t a “poor me” story. I’m a rational person who makes considered choices and takes full responsibility for the newsletter, the fund, and my income.
But one thing is certain: I can look myself in the mirror and be proud that, despite the pressure, I continue to do what I believe is right.
Why I believe in European small caps was already outlined two weeks ago: https://www.valuingdutchman.com/p/why-i-believe-in-european-small-caps
Let’s end with an important life lesson from Warren Buffett:
"It takes 20 years to build a reputation and five minutes to ruin it."
Your transparency and perseverance are truly commendable. In a world where many are fixated on short-term gains, your focus on patience and fundamental value will ultimately prove its worth. As Buffett wisely said, 'Patience is the key that unlocks value over time.' Criticism like this often says more about the sender's mindset than about your strategy. Stay true to your principles; the market will reward your conviction in the end.