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  1. #231
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    "Navigating The ‘Not so Easy Money’ Era"
    https://simplywall.st/article/naviga...tent=Variant+1

    "investors should consider the prospect of rates remaining higher for longer."

    “I believe investors can gain an advantage by studying cycles, understanding their causes, and watching for excesses in one direction that are likely to lead to corrections in the opposite direction.” - Howard Marks"
    "The Effect of Low Interest Rates
    Marks mentioned the following 10 effects of low rates:

    Low interest rates stimulate the economy
    Low interest rates reduce perceived opportunity costs
    Low interest rates lift asset prices
    Low rates enable deals to be financed readily and cheaply
    Low interest rates can lead to financial mismatches
    Low interest rates encourage greater use of leverage, increasing fragility
    Low interest rates encourage risk taking, leading to potentially unwise investments
    Low interest rates give rise to expectations of continued low rates
    Low interest rates bestow benefits and penalties, creating winners and losers
    Low rates induce optimistic behavior that lays the groundwork for the next crisis
    We’ve changed his order slightly, but the point is:

    The first five are mostly about the maths.
    The second five are about behavior, and are easy to overlook.
    The behavior of investors, business leaders, and consumers changes when rates are low - or expected to fall or remain low. This behavior has longer term consequences for the economy and individual companies.

    " When rates are low, lenders and investors are forced to take on more risk to earn a return. This leads to higher asset prices and more investment - but eventually reality catches up, leading to a scarcity of credit - and higher rates, which is the price of that credit."
    Last edited by kiora; 12-02-2024 at 10:47 AM.

  2. #232
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    "4 important investment lessons from this 6-bagger stock

    "Letting your winners run" is a trite saying that's rarely accurate, but it played out for this British software company"

    https://www.livewiremarkets.com/wire...rm=4%20LESSONS

    Do Your research !

    "The stock price fall might have been entirely justified, but we felt it was also fertile ground for overreaction. After speaking with one of the founders, with sales executives and customers, we developed confidence that Blancco remained a growing business with significant tailwinds, happy customers and strong profitability.

    After laying out a full thesis in 2017, it was at this point that we made an initial investment in the company right into the teeth of the market panic.

    Increase weighting with greater confidence
    A new CEO, Matt Jones, joined the business in March 2018 and released his first set of results a few months later. This also included an updated strategy for the company. These results confirmed that Blancco’s problems were temporary. These developments helped confirm the team’s initial thesis.

    During the next couple of years, by June 2019, Blancco moved firmly out of recovery mode and into growth mode. Sales and profit expectations for the financial year 2019 were upgraded."
    “Let your winners run” is one of those trite sayings that is wrong as often as it is right. But business valuation is an inexact science and risk is a variable. Forager’s “upside” valuation didn’t change dramatically through this period, but the probability of that case unfolding increased dramatically alongside Blancco’s growth, profitability and cash flow."

    Make big aggressive bets, up to 50% of portfolio value, when you know the investment really stakes up
    I've done this 5 x now over 4 decades.

    The more often this is done & succeeds the less % downside risk to your total portfolio as any new position will be a smaller % of the total portfolio value



    "We should have bought more aggressively."

    Don't be left wondering !

    "Developing a thesis that is both contrary and correct is everything when it comes to stock market outperformance. It’s periods and locations of immense pessimism where such opportunities are most likely to be found.
    Due diligence is crucial here: It can enable you to confidently turn a loose theory into a firm thesis.
    Risk management is key but rework your odds as new information arrives. Just because a stock has doubled since you bought it, doesn’t mean that the risk/reward equation has deteriorated.
    Managing position size as your perceived edge grows or shrinks
    ."

    Being overweight in one stock/investment is no different to buying a business.
    After all,how have the extraordinary wealthy accumulated their wealth?

    This is one area were private investors have an advantage over fund managers as managers rules will exclude them from being so overweight in one stock or investment.
    Last edited by kiora; 19-02-2024 at 09:16 PM.

  3. #233
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    Sep 2009
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    If you don't measure,record & compare you won't know

    From Marketscreener

    "Dear investor,

    Are you suffering from The Dunning-Kruger Effect?

    Now, if you don’t know what that is, allow me to explain…

    The Dunning-Kruger Effect is a cognitive bias where an unskilled investor overestimates their ability to find winning and profitable trades.

    You see, many investors scored big profits in 2020 and 2021 during the bull market.
    However, it all changed at the start of 2022…

    …when all of a sudden fundamentals mattered again.

    In fact, if you ran the 2020 playbook this year, there is a good chance your portfolio has gotten obliterated… or even worse…wiped out completely."

    https://www.investopedia.com/dunning...effect-7368715

    "Minimizing the Dunning-Kruger Effect can be achieved through education, training, accepting criticism and feedback, and taking in objective evaluations of knowledge or ability."

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