Popping Tags

At dinner the other night, my youngest daughter asked what I actually do all day in my office. I work from home pretty often, so from her perspective, I just disappear behind a closed door for hours at a time. After a few failed attempts to explain investing with phrases like “time value of money” and “present value of cash flows,” I tried a different angle.

I told her I pop tags.

If you don’t live with three high-school girls who’ve had Macklemore on repeat since 2013, “popping tags” means thrift shopping. 

The mystic allure of thrift stores? Anything could be waiting on the rack; it’s a veritable world of possibilities.

My daughter imagines a perfect pair of overalls, maybe 85% off, tags still on… it’s the realm of “what ifs.”

Popping tags is the first step of my investing process: searching for new ideas.

When you’re thrifting, you drift from rack to rack, scanning for potential. You grab what looks interesting, skip what doesn’t, and move on. There’s no real cost; you’re only limited by how much you can carry.

Investing works the same way. There are thousands of stocks to sort through. The goal early on is just to gather possibilities — glance at a wide range of businesses, toss the obvious “no’s,” keep the “maybe’s.” 

It’s low stakes. You’re just exploring.

Then comes phase two: the dressing room.

Now it gets serious. Does it fit? Does it make my shoulders look weird? What would I even wear this with? Do people still wear overalls? 

Suddenly you’re making real choices. Closet space is finite. Money’s on the line. The analysis begins.

For me, this is when the deep research starts — reading annual reports, listening to earnings calls, studying filings, doing primary work. This part can take weeks. And most of the ideas that make it this far don’t survive phase 2. 

The first phase is full of hope and curiosity; this one’s about discipline and saying goodbye. You’ve spent days getting excited about a company, only to uncover something that breaks the thesis.

I’ve started to think of it like the stone sculptor who lives next door (no seriously, a stone sculptor lives next door to us, I swear).

Out my office window, I can see large blocks of stone delivered to his yard by crane. For days, he chips away with the hope of creating something beautiful. Sometimes, after weeks of work, the stone cracks — a hidden flaw he couldn’t have known about. The piece is ruined. He starts again with a new block.

That’s what this part of the investing process feels like. Weeks of digging, only to find a fatal flaw you couldn’t see at first. Most of the time, the work ends there. But every so often, one of those ideas makes it through the gauntlet and into the portfolio. 

A few beautiful investments make all the chipping and sifting worth it.

So when my daughter asks what I do all day, I tell her the truth.

I pop tags. I hunt for treasures. Most of what I pick up doesn’t make it home… but every once in a while, I find something special.

She nods, unimpressed, and goes back to eating. Luckily for me, CDI’s clients and partners are more interested in the tags I pop than my daughter.

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This post is for informational purposes only and should not be viewed as a recommendation to buy or sell any security or personalized investment advice. The views and opinions expressed by individuals are their own and not the views or opinions of their employer. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. No discussion or information contained herein serves as the provision of, or as a substitute for, personalized investment advice. To the extent that a reader has any questions regarding the applicability above to his/her individual situation of any specific issue discussed, he/she is encouraged to consult with the professional advisor of his/her choosing. City Different Investments is neither a law firm nor a certified public accounting firm and no portion of this content should be construed as legal, tax, or accounting advice.

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