Fund_GM

The behavior of the individual matters more than the behavior of stocks. The meta‑game: the decisions behind the decisions. How do you evaluate the evaluator?

[Fund_GM @Fund_CDM]

The investment industry has historically over rewarded diligence and under rewarded judgment.

Not because judgment matters less.

Because diligence was easier to observe.

AI is starting to change that.

Information gathering, modelling, and summarisation are rapidly being commoditised.

Discernment is scarce.

[Fund_GM @Fund_CDM]

I’m talking specifically about costs.

Funds spend an enormous amount of time focusing on explicit costs like commission, slippage, borrow rates, tracking error, down to snacks in the kitchen.

Meanwhile the biggest cost by far is usually opportunity cost.

Capital trapped in mediocre ideas.
Missing the fat pitch trying to save a few ticks.
Time spent on things that never turn into positions.
That is where most of the leakage is.

[Fund_GM @Fund_CDM]

I’m talking specifically about costs.

Funds spend an enormous amount of time focusing on explicit costs like commission, slippage, borrow rates, tracking error, down to snacks in the kitchen.

Meanwhile the biggest cost by far is usually opportunity cost.

Capital trapped in mediocre ideas.
Missing the fat pitch trying to save a few ticks.
Time spent on things that never turn into positions.
That is where most of the leakage is.

[Fund_GM @Fund_CDM]

The biggest cost in investing is opportunity cost.

Everything else is just a rounding error.

[Fund_GM @Fund_CDM]

Fundamental equity firms rely too much on price action for risk management.

But price action is often downstream.

Most risk models solve for volatility.
Real risk management needs to solve for suboptimal capital allocation.
The real signal is in behaviour upstream.

How people size versus expectations.
How they react to missed estimates.
How quickly narratives shift under pressure.
How often they average down.
How conviction changes after price moves.
How much time gets spent defending versus reassessing.
How exits get delayed once ego attaches to the thesis.

Longer duration fundamental investing cannot rely exclusively on price action for risk management.

The biggest risks are often not volatility itself, but capital and time quietly trapped in poor ideas.

[Fund_GM @Fund_CDM]

Fundamental investing is naturally error prone.

The same traits that produce differentiated ideas and non consensus bets also create blind spots.

Conviction can become attachment.
Independent thinking can become overconfidence.
Patience can become thesis drift.
Aggressive sizing can quietly turn ego into risk.

It's not about eliminating mistakes entirely, but recognizing them earlier and reducing how much capital and time they consume.

[Fund_GM @Fund_CDM]

One of the biggest time sinks is “watchlists” of names that never convert into positions and usually never will.

Analysts updating models, reading earnings, listening to calls on companies they’ve followed for years but will never have a position in.

It looks productive.
It feels safe.
It gives structure through each earnings cycle and gives the impression you're on top of things.

[Fund_GM @Fund_CDM]

One of the biggest time sinks is “watchlists” of names that never convert into positions and usually never will.

Analysts updating models, reading earnings, listening to calls on companies they’ve followed for years but will never have a position in.

It looks productive.
It feels safe.
It gives structure through each earnings cycle and gives the impression you're on top of things.

[Fund_GM @Fund_CDM]

Attended a trading conference yesterday listening to investment banks discuss the minutiae of stock execution to a mostly fundamental audience.

Always feels like the wrong conversation.

It’s like club golfers debating Pro V1 vs Pro V1x when the real issue is how the club head is striking the ball at impact.

For most fundamental investors, the edge isn’t in shaving a few basis points on execution.

It’s getting the idea right.

And more importantly knowing when to close the position. Just focus on hitting the ball better.

[Fund_GM @Fund_CDM]

Martellus Bennett said Tom Brady adjusted his game to his teammates.

Most QBs run their system and expect everyone else to adapt.

Great PMs do the Brady thing.

They adapt to the analysts and market they have.

Average ones just keep running their playbook.

[Fund_GM @Fund_CDM]

My wife sets the AC in the car to 64 deg when she wants it at 70 deg.
Similarly, she also sets the oven to 450 when she wants it at 350.

I know she's not alone in this behavior.

[Fund_GM @Fund_CDM]

Jocko Willink talks about the difference between garrison leaders and battlefield leaders.

Garrison leaders thrive in meetings, structure, and well-prepared plans.
Battlefield leaders are often quieter but excel in chaos, uncertainty, and real-time decisions.

Markets have a similar divide.

Many analysts operate more like garrison leaders. Their edge is depth of analysis, preparation, and narrative. It’s credible, but they’ve never been on the front line and it shows.

Successful PMs tend to look more like battlefield leaders. Once the position is on and the tape starts moving, the environment shifts. Process, conviction, and ego all get tested in real time.

In the end, it comes down to judgment.

[Fund_GM @Fund_CDM]

I know a few podcast guests personally who sound brilliant but are mediocre investors and questionable people.

Yet I still listen to the next episode and treat the guest like an authority.

Gell-Mann Amnesia but for podcasts.

[Fund_GM @Fund_CDM]

@benleo_econ @ben_golub @pangram https://t.co/D2wadXNwad

[Fund_GM @Fund_CDM]

@FangYi11101 @pangram @ben_golub Maybe I is an AI

[Fund_GM @Fund_CDM]

Some people seem unsettled that a Substack like Citrini can move stocks.

For years, markets reacted to “Goldman upgrades” and "Morgan Stanley downgrades" as if the institution had spoken.

In reality, it was often just Mike, 32, Drexel grad, updating a model and sending a note.

The logo made it feel institutional.

Big banks were the newspapers of finance. They controlled research distribution the way legacy media controlled journalism.

Now it feels like podcasts versus traditional TV and radio.

Different channel but the same mechanism and maybe HR at the banks weren't the best at identifying the best potential analysts.

Joe Rogans of finance will emerge from Substack.

[Fund_GM @Fund_CDM]

The best PMs and analysts are often the ones who don’t take offence at being wrong.

More broadly seems to be a pattern in a lot of successful people that they can handle rejection, criticism, or failure. It’s all lumped in to being able to separate yourself and your ego from the outcome.

But when monitoring PMs and analysts it can be a real tell.

[Fund_GM @Fund_CDM]

If we’re comfortable judging a CEO’s ability to run a business from afar, we should be equally open to scrutiny of how we run capital and build a portfolio.

If you believe you can evaluate decision makers, you should also be comfortable being evaluated as one.

Accountability has to cut both ways.

[Fund_GM @Fund_CDM]

@FangYi11101 @pangram @ben_golub Maybe I is an AI

[Fund_GM @Fund_CDM]

@anistotle_ Excellent article! Hats off.

[Fund_GM @Fund_CDM]

Fair point.

Sell side analysts operate within compliance frameworks. That creates guardrails.

But they are also solving for corporate broking, secondary offerings, and management access. The incentives are never neutral.

Substack has different incentives. Not necessarily better. Just different.

We once treated the NY Times and BBC as unimpeachable arbiters of truth too.

Marshall McLuhan was right.

The medium is the message.

[Fund_GM @Fund_CDM]

Fair point.

Sell side analysts operate within compliance frameworks. That creates guardrails.

But they are also solving for corporate broking, secondary offerings, and management access. The incentives are never neutral.

Substack has different incentives. Not necessarily better. Just different.

We once treated the NY Times and BBC as unimpeachable arbiters of truth too.

Marshall McLuhan was right.

The medium is the message.