What are your Investment Rules?

[kiora]

"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."

[kiora]

"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.

[kiora]

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."

[kiora]

Some 'guru STers' are very good at timing the market?

"78% of the stock market’s best days occur during a bear market or during the first two months of a bull market."

https://www.hartfordfunds.com/practi...e=linkedin.com

Not for me but If someone wants to spend more time on investment decisions

https://www.investopedia.com/article...d-triggers.asp

But beware of the traps

"Filtering Considerations
An important consideration in choosing trade filters is not to limit the "degrees of freedom" in a trading plan. In other words, too many filters may create a statistically improbable trading setup that would rarely, if ever, be true. This greatly limits the ability of a trading plan to be robust, consistent, and profitable. "

In the final wash up its fear & greed that drives the market & there is alot of click bait out there.

[kiora]

And then there are the 'whales'

"5 Stock-Picking Secrets of the Whales"

If you follow them you will be too late to the show?

https://www.nasdaq.com/articles/5-st...les-2015-08-14

[kiora]

Mysterious:My portfolio returns are highest when I'm most generous with my time &/or funds

It (literally) pays to be generous.,you will be repaid in spades.

https://ethicalleadership.nd.edu/new...0opportunities.

Studies on being generous

https://ggsc.berkeley.edu/images/upl...sity-FINAL.pdf

[kiora]

Anology of a decent investment.

"A great company at a fair price"

They come looking for you if you look in the right places

"Liegl: Yes, as Warren Buffet says, if you’ve got a
baseball team and a guy is batting .400, you don’t
try to teach him how to swing"

https://www.berkshirehathaway.com/letters/rvbiz.pdf

[kiora]

Why would any investor want to hold bonds or cash in their portfolio ever?
Or are they better at timing the market than everyone else?
Yeah right .

Third Chart: Stocks vs bonds in Australia

https://assets.livewiremarkets.com/r...E2%80%AFam.png
Source: AMP, Macrobond

What is it? The cumulative, total return performance of stocks vs bonds vs cash in the Australian market.

Why does it matter? The returns in shares continue to far outpace bonds and cash. Even in its exaggerated form, the magic of compounding interest still stands.

"That should be the dominant motivator to invest," Oliver says. "Of course, you're going to have setbacks and they will all feel very gloomy, whether it's the 1970s and the GFC. All those things happened but for someone who took advantage of those dips, they did fantastically well," Oliver adds.

Source: AMP, Macrobond

https://www.livewiremarkets.com/wire...OF%20INVESTING

[kiora]

Turn Arounds

Often starts with a discounted capital raise
If done right turn around stories are a great investment.Reminds me of SKL many years ago,capital raise at $0.50

"Things to look out for
-Is the business well capitalised: As we noted above, Bravura had a market cap of $120 million with approximately $85 million cash after the capital raise
-Share price consolidation: Bravura traded within an extremely narrow range for more than three months
-A turnaround is taking place: Bravura's FY23 result, November AGM and 1H24 result all contained positive surprises. The turnaround is clearly gathering some momentum

https://www.livewiremarkets.com/wire...D%20OUT%20MORE

[kiora]

"Delivering "wealth beyond measure"
What's this magic feature?

These are Buffett's words:
At Berkshire, we particularly favor the rare enterprise that can deploy additional capital at high returns in the future. Owning only one of these companies -- and simply sitting tight -- can deliver wealth almost beyond measure."

https://finance.yahoo.com/news/warre...122600682.html