On Skin in the Game

My narrative about a biased and insincere claim made by some financial newsletter publishers and echoed in their readers' comments

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This post discusses my perspective on “Only trust investment newsletters whose writers have 100% skin in their game.”

Translation: They are allegedly buying or going long on every stock they recommend and shorting or selling every stock they are bearish on.

But there is no mention of the inherent bias in writing only about stocks they are long or short.

Bad advice. Repeat—flawed, self-serving advice. Expecting or requiring an author to hold and disclose 100% long or short positions in securities rated as bullish or bearish in an investment letter is an emotionally charged sales pitch that investors should avoid, as an alpha-seeking stock selection practice relies on rational thinking for success.

An investment-related research article’s disclosure is the unwritten rule—albeit a written rule for registered investment advisors—of financial narratives. I agree with the criticism of writers who recommend buys or sells without officially disclosing their stake, or lack thereof, in the equities they cover. Formally sharing such pertinent information is precisely what Quality Value Investing’s (QVI) disclosure template aims to do, in the spirit of being honest and ethical, as should be expected from its readers.

Nonetheless, requiring or expecting an advisor’s or author’s 100% skin in the game is a false and unproductive narrative.

Let’s explore my reasoning…