The Ashley Grayson agency believes in the Berkshire Hathaway approach to business: we select our clients and their works as long term investments, not just for the drug-like rush from a hot sale. This year we will be more open about our approach, so read on to see how we think. And how you should be thinking about investing in yourself and your own works.
Last week, CNN Money ran an article derived from a new book by Professor Burton Malkiel (Princeton, economics) and author Charles Ellis, titled The Elements of Investing. For some reason, the article didn’t mention the publisher, which is Wiley. I haven’t read the book, but if it has even 10% more value than the article, it will be worth buying. While not new advice in any way, it’s smart. The 6 biggest investing mistakes should be read by every author. Click on the article title and enjoy the wisdom of Malkiel and Ellis (not our clients), which is all about finance and the stock market, but here are the key points, restated for authors.
The six biggest investing mistakes for authors are:
Surveys show that everyone feels he or she is above average in most things. Authors are no different. Authors develop real confidence over time as they master their voice and craft. New authors should not expect to get everything right with their first work but have no recovery plan when faced with the reality that their book needs more work. The biggest external sign of overconfidence is self-publishing. Self-publishing is a valid tool, but it is best wielded by an experienced author to achieve a financial target, not as a way to get noticed. If Big Experienced Publisher (or agent) doesn’t feel they can make money with a book, why does the author so frequently assume they can?
Following the herd
Herd following investors can make money, and their willingness to pay ever more for stocks drives up overall shareholder value, but there is a top to everything and the big rewards belong to those who get in before the stampede. Herd following investors are often said to subscribe to the “bigger fool” theory: If I will pay $100/share for this stock, some bigger fool will pay $115 and then I’ll sell. At the moment, the herd-following authors are frantically turning out sparkly vampire novels and DaVinci Code-type books. Some trend-following books will sell, but when the market is saturated, there will be no place for those books to go; and unlike the herd investor, they can’t unload their investment at $80/share because an author can’t get his or her time back
Knowing when to get in and when to get out is key to success in both stocks and books. Often tied to herd following, timing depends on what the author feels about the nature of his or her work. Timing is frequently a danger for non-fiction authors. Offering a truly unique book that’s way ahead of the buzz may produce the “there’s no category for that” response from publishers, while developing a book to join six other robust titles may fail because the category is over published. Generally, if the author feels the book is likely to lose value in the short term, it is not a good writing investment as a book, but it might be a hot blog.
Investors who are making the control mistake place too much faith in their system, be it day-trading, technical chart analysis or guru-newsletters promising hot bargains. Again, self-publishing teases authors with the illusion that with control of their sales, they can somehow outperform the big publishers at selling books. Our advice: don’t get obsesses with control. The author’s job is to write the book, not make the sales.
Even cautious investors who seek the security of funds and portfolios managed by certified professionals can end up with low yields or even losses if the management fees are too high. Authors have some protection in the standard 15% of agent commissions, but a dozen other pseudo-professions have arisen to suck up author assets: self-publishers,, publicity services, editorial coaches, and even fee-charging find-an-agent services. Good advice is always worth something, but paying for some information, like, “you are up in a balloon” doesn’t pay any return.
Stockbrokers make money on every trade whither you make or lose money. They want you to trade because they make money either way. Traditional agents are different, we only make money when you do. But faux agents who charge a marketing fee, representation contract fee or other fee still thrive. Be careful in who you work with, even if they are apparently working for you.
Here’s the really interesting part. The six big investing mistakes for publishers are exactly the same.