A couple of weeks ago we told you how Club Moneymakers has been hopping under new management. We also told you about this other club, which is a shadow of its former self now that everybody is lining up in front of Club Moneymakers.
It’s time to present you with an image of how that other club looks now. It’s called Value Investing Lounge.
Glitzy and glamorous, but… empty. Why?
Ben Graham used to run this place. It was called the Investing Lounge at the time and it was full every night of the week; stocks, bonds and real estate were top of mind in every chat circle.
Then, something funny happened. The conversations changed. Now, it wasn’t just stocks, bonds and real estate, but it was also gold, art and even collectibles. Management of Investing Lounge made it clear to these people that they were not welcome at the lounge. The reason was simple: you could speculate on, but not invest in gold, art or collectibles so it was a verboten subject.
What did these people do? They left and started frequenting Club Moneymakers across town instead. The audience was in the right place. You certainly could make money on gold, art and collectibles, and there was nothing wrong with that. That said, old habits die hard. These folks were used to visiting the Investing Lounge, so they continued to use the word investments. That sounded so catchy, even though the sign at the door officially read Club Moneymakers, almost everybody started calling it Club Investments.
That bothered the management team at the Investing Lounge. Ben Graham wasn’t around anymore and Warren Buffett was running it; something had to change. Buffett summoned his top executives on a nice Spring day in 1984:
Buffett: What do you think? Should we fight? The guys over there, everybody calls them Club Investments.
Executive Team: But they haven’t officially changed their name, so we can’t really claim customer confusion, can we?
Buffett: It’s a matter of time. We may not have a legal claim, I get that. But don’t you think that the customers are confused regardless?
Executive Team: They are but maybe instead of fighting, we find a way to differentiate ourselves.
Buffett: Hmm, not a bad idea. Investing is all about value. What do you think of Value Investing? We can just add the word Value in front of Investing. We can also do a brand new logo, perhaps a nice “V.”
Executive Team: Yes! Let’s do that. That will signal to our audience we are the original and only way to invest.
That’s the backstory of the sign and logo. Did the name and logo change really help win back the customers? Unfortunately, that was not the case. Over time, fewer and fewer people showed up. Everybody just wanted to go to Club Investments. Buffett summoned the team again in 1992.
Buffett: Folks, it’s been eight years and I think it’s safe to say my idea did not work.
Executive Team: What do you mean, boss?
Buffett: We should have never added the word “value” to our sign. It’s redundant.
Executive Team: How so?
Buffett: What is "investing" if it is not the act of seeking sufficient value at least sufficient to justify the amount paid?
Executive Team: What do you suggest we do?
Buffett: Let me send a letter to our members telling them the very term "value investing" is redundant. To be more precise, the word “investing” is fine, the word “value” is what’s redundant.
Executive Team: Should we demolish the sign, too?
Buffett: The letter should be just fine.
The letter was not “just fine,” however. Buffett said many great things and this was perhaps the most important one, but it fell on deaf ears.
Can you see what happened here?
Investing Lounge was renamed to Value Investing Lounge in 1984.
Club Moneymakers was renamed to Club Investments in 2008.
When investing became value investing, it created room for other types of investing when, in reality, there actually were none. The talk at Club Investments involved gold, art and collectibles. Fashionably late to the party, crypto eventually became the main topic, even though Satoshi himself was not comfortable pitching Bitcoin as an investment. The SEC played along, perpetuating the myth instead of doing something like this. It seems like everyone has stopped questioning what investing actually means; everyone except for us that is.
This is why we are here. Remember, F is for Finance and 27 is for 2027. Our goal is to start a conversation and lead society to a consensus on definitions by the end of 2027, the most important definition being the word “investing.”
