Form Follows Function

The Buylyst is designed to help you make better investing decisions. It’s an Intelligent Ecosystem that’s part research database, part magazine and part educational tool. But the overarching theme is Clarity. We want to make investing as simple as possible.

It’s a challenge to take something normally considered dry and boring and make it intuitive and entertaining. That becomes doubly challenging when you have different types of users. Mostly, The Buylyst users are a curious bunch who like investing and have some experience in it. But a not-so-secret goal of The Buylyst is to spread the wisdom of Intelligent Investing to people who are not really into investing because they find it too intimidating. For those newbies, The Buylyst has been designed to be a great educational tool. For more seasoned (Active) investors, The Buylyst has been designed to mimic their thought process. 

A common design thread throughout the site is “layering”. Every article in the Worldview or Guest List sections has a “BuyGist” card, which summarizes the salient points. Every Thesis pop-up in The Buy List and the Watchlist is a quick one-pager summary. From a Thesis pop-up, you can go as deep into the rabbit hole as you want from this one-pager. Or just get the 5-minute analysis. There are many exits on this highway.

We had to be careful. We wanted to avoid being "everything to everyone". Instead, we were aware that our core user-base would be limited to the curious type. That's a minority. But within that group, it seems to us that there are three main types of users. The layout of The Buylyst, we hope, simplifies the process for all three groups:

1. The Top-Down Investor
2. The Bottom-Up Investor
3. The Keen Student of Investing

The Top-Down Approach: Worldview as a Starting Point

In industry-parlance “Top-Down Investing” refers to a style of investing that depends on making “macro” bets. Funds making bets on the overall stock market, or overall bond markets, or directional bets on commodities markets (like Oil, Gold etc.) are generally known as “Top-Down” investors. Traders (not investors) is probably a more suitable term for them. The Buylyst is not a “Top-Down” trader. But as a user, you can mimic a Top-Down approach. And it’s a perfectly logical way to go about it.

The Worldview Section can be a starting point for a Top-Down type of investor. It houses many discussions about industry trends and socio-economic phenomena that inform us about where to invest. But there is one significant difference between The Buylyst Worldviews and the top-down “macro” approach mentioned above: The Buylyst Worldviews are not about making bets on macroeconomic variables or on financial markets or on specific industries; they are about forming an informed opinion about the ecosystem within which companies in The Buy List operate.

It’s true that The Buylyst Research Process usually starts with a Worldview examining an industry or a phenomenon that looks interesting, durable, and profitable. But the intent of this examination is not to simply bet on the macro trend. It is to:

1. Eliminate fads and make sure we’re not playing the wrong sport, where industry headwinds will make it challenging for historically well-run businesses to flourish.
2. And if the indications are that the industry or phenomenon is not a wrong sport – that it has a greater probability of an upswing than a downswing – then the next step is to find investable companies that may be able to harness this tailwind. This is very different from an outright bet on a macro phenomenon. In simple language, if we have a well-reasoned worldview of an industry or a phenomenon, we’re reducing the likelihood of playing the wrong sport. Think of Worldviews as a Risk Management exercise.

This sort of “top-down” approach – observing a trend or phenomena in the real world – is a natural way to look at investing opportunities compared to say a “quantitative stock screen”. The underlying truth behind The Buylyst type of top-down approach is this: Investing is not divorced from the reality of our daily lives. The world, the country, the city, the street, the community in which we spend our days in part of a giant ecosystem within which companies operate. Investing in those companies means having a well-formed worldview about that ecosystem. Otherwise, we’re shooting in the dark.

Over time, we made it easier for the top-down investor. We realized that our "latticework" of worldviews started forming  clusters. We quickly went back to the drawing board, and came up with our Themes Page. We really think this will drive the point home for a lot of investors - it's probably even more intuitive that the worldviews. Of course, we soon added a Themes filter to the Worldviews page for your convenience. 

The Bottom-Up Approach: The Buy List as a Starting Point

The “Bottom-Up” approach in investing generally means assembling a portfolio of specific bets on companies. Chances are that your portly Fund Manager brags about his “bottom-up” approach. The modus operandi is this: 1) Funds have a quantitative stock screener which spits out several “investable” stocks based on certain quantitative criteria. 2) The team of Research Analysts goes to work on some of the stocks which made the cut – and this is the point at which analysts start examining the industry or the ecosystem in which these companies operate. 3) They do their valuation work and “pitch” their findings to a portfolio manager if they find a good investment. 4) The Portfolio Manager (or portfolio management team) decides whether the idea makes it into the portfolio.

This process is efficient, but not that intuitive (to me at least). In my view, the top-down approach of observing industry trends or phenomena in the world around us first is far more intuitive. Observing the world, reading about it, and forming a worldview (however half-baked it may be) come naturally to most of us. Of course, using a quantitative screener along with well-reasoned Worldviews may be the ideal approach. But in going primarily “bottom-up”, the worldview part of it seems like an afterthought. And most often it is.

Having said that, The Buylyst Research Process does have a simple “quantitative screener”, if you will, as part of its research process. But it’s used in tandem with our Worldviews. The screener is meant to rule out “un-investable” ideas, and to prioritize our time. It is not meant to discover hidden gems. The Buylyst will probably, over time, develop a more nuanced quantitative screen. But it will be designed to complement the “landscape thinking” of our Worldview section.

Many users, however, will prefer the more “efficient” bottom-up approach anyhow. And there is nothing wrong with that. The Buy List is designed with that sort of efficiency in mind. Here is a quick user manual for the bottom-up user:

1. Each company on these lists are accompanied by a simple one-page Thesis pop-up.
2. Each Thesis pop-up has links to a more Detailed Thesis write-up, for the curious.
3. Each Thesis pop-up also has links to a Detailed Valuation, for the numerically curious.
4. And there are links to Related Worldviews as well, for the thorough, uber-curious, Intelligent Investor.

The Buylyst Research Process may not be a pure bottom-up process; but The Buylyst user-experience can easily be one.

For the Keen Student of Investing: The Buylyst is a Live Investing Manual

Making users better investors is the central part of The Buylyst mission. Yes, it’s a research database and it’s a magazine. But at its heart it is a live Intelligent Investing manual. And it’s been designed to be simple and informative at every step of The Buylyst Research Process. Starting from the Worldview articles about the art of investing is a good idea. For example, “What is Intelligent Investing?” is a good starting point. Each of these Worldview Articles on the art of investing is heavily influenced by the contents of the Mental Models sections.

Mental Models form the backbone of The Buylyst. These are the building blocks of The Buylyst investing philosophy and, consequently, its research process. Everything we do is heavily steeped in the Buffett-Munger-Graham mode of investing, otherwise known as Intelligent Investing. But it’s not just those three wise men. The Mental Models section is built upon standing on the shoulders of other giants as well – of investing and of other fields. And all the content from this section spreads like a neural network throughout The Buylyst ecosystem, informing every part of the research process – the Worldview, The Buy List, The Watch List and so on. The Buylyst is designed with the idea that a user should be able to learn as they go along, whether they’re a top-down or a bottom-up type of person.

For subscribers, this is hugely valuable. The Buylyst is a living, breathing, growing encyclopedia of Intelligent Investing, or just Investing, as Buffett would label it. It’s not just intellectual content; it’s content that’s in action via a live Buy List and a live portfolio. That’s the type of education you won’t get in a business school or in a book.

The Buylyst latticework of Mental Models itself is free for all. The content in this section is not The Buylyst’s proprietary work. It’s borrowed wisdom. But the way it’s been designed and arranged makes it a massive resource on Intelligent Investing. Whether you’re a subscriber or not, The Buylyst hopes you’ll be a more Intelligent Investor. This treasure trove of knowledge will help you get there.

Many Happy Returns.