In the last post, I have advocated in favor of writing investment cases down and making explicit each linchpin assumption not only for yourself, but to the investment team. As the previous book target public ranged from students to research reporters, I took my time to read another book called The Investigative Reporter Handbook, which aims to be a reference book for investigative journalists, irrespective of which sector they cover – from the government, to healthcare and so on.
I pretty much do not recommend the whole book, but there are some gems we can use in our day-to-day job, pretty practical ones. They tangle 3 main topics:
Research process:
- Work the case from the outside in / Step back and see the bigger picture, don’t get lost in the details. What are the key questions of the case? And it can’t be more than 3, otherwise you still don’t know how to ponder what is the unknown that must be known
- Constantly summarize the story in as few words as possible – be sharp
- Collect both supporting and contradictory evidence
- Parallel backgrounding: traits left by institutions lead to insights on people, and vice versa
- “Documents” can lie just like human sources, after all, humans craft them: triangulate
- Review primary, secondary and tertiary sources
- Analyze power structures, both formal (likely in the form of organograms), but informal ones too (remember who actually run ANF?) – Understanding power structures gives a journalist a road map for discovering secret sources and hidden motivations
- Since most recent evidence may make old research material relevant, periodic reviews of the case are recommended
- Start writing as on as the investigation begins
Interviewing:
- You must convince your sources that you are a human being and that you are interested in the as people, too. Not merely transactional
- Interviewing is all about building bridges, maintaining them and sometimes repairing them
- Because you might have only one shot to interview a source, it is best to wait until most documents are in hand
- Ask WHY. Use silence in your favor. Questions that lead to yes or no answers should be avoided. Ask for potential sources, people, articles, books. Ask for what you left uncovered but that should be mentioned or analyzed
Thinking:
- Weigh carefully what the evidence shows
- Always question conventional wisdom
- Investors must confront what they think and become aware of certain assumptions they have brought to their subject. Everything should be scrutinized
- “Questions yield new dimensions for the final stories”
- Remember not to learn something every day, but craft a new good question for the next day as well
- An investigation story should answer the SO WHAT, as well as the WHY, WHAT, WHEN, WHERE, WHY, HOW. The answers are generally in the details. The surviving details should form a chain of facts rather than a stack of facts. INSIGHT is key
- The effective writer should always have an essential naivete, skepticism must be balanced with innocence
- Think visually about your story, simulate your hypotheses
Tropical Value Investing 