What are your Investment Rules?

[kiora]

The old addages
"21 great investment quotes from Warren Buffett, Benjamin Graham, and others"

https://www.livewiremarkets.com/wire...m=TOP%20QUOTES

"“More money has been lost trying to anticipate and protect from corrections than actually in them.”

Reticence is everywhere

[kiora]

Investment advisors recommend rebalancing the portfolio,for mediocracy?

"78% of Warren Buffett's $369 Billion Portfolio Is Invested in Just 6 Stocks"
"firmly believed that their top investment ideas deserve added weighting"
"Even after Buffett and his team reduced their company's stake in Apple by roughly 1% during the December-ended quarter, it still accounts for 44% of invested assets."
"Even though recessions are an inevitable part of the economic cycle, economic downturns pass quickly. Whereas no recession since the end of World War II has lasted longer than 18 months, two periods of growth over the same span stuck around for at least a decade. Companies like Bank of America should be able to successfully grow their loan portfolios over time as the U.S. economy expands."
"in addition to facilitating transactions and collecting a fee from merchants, American Express is also acting as a lender to consumers and businesses in which it earns annual fees and interest income. During extended periods of economic growth, AmEx's ability to double-dip allows it to thrive
"Coca-Cola also enjoys virtually unsurpassed geographic diversity. With the exception of Cuba, North Korea, and Russia, it has existing operations in every other country."
"The "integrated" aspect of Chevron's operating model is also important. Although drilling generates its juiciest margins, Chevron owns transmission pipelines, chemical plants, and refineries. If the spot price of crude oil declines, the company's midstream and downstream assets act as a hedge that stabilizes its cash flow"
"Occidental brings in the lion's share of its revenue from its upstream drilling segment."

[kiora]

Are you addicted to wealth?

"“The question I always get asked by the media is what is the difference between a healthy excessive enthusiasm and an addiction,”

https://www.cnbc.com/2014/02/05/is-w...nequality.html

"Cooking the Books: ‘Rich listers get addicted to the success, not the money’
https://businessdesk.co.nz/article/p...1272-446239310

[kiora]

"Wrestling the gorilla"
"Despite incessant commentary to the contrary, the US economy is the strongest it has been in over 30 years"
" It’s very important with this in mind to note that factually, when everything seems bleakest it is uncannily common for it to be at its brightest.

Let’s look at the economic gorilla of the world – the USA. At the end of 2022 and early 2023, most managers, economists and commentators warned that bad times lay ahead. Here are 8 key indicators that show that for last year and indeed for at least 30 years, the US has never been in better shape."
"Will the good times end?

Perhaps it’s best said by that infamous barman from the 1980s movie ‘Cocktail’...
“Everything ends badly otherwise it wouldn’t end.”

The unknown but most essential question is of course when?
For those in cash, and there has been a lot sitting on the sidelines for years now, bad times would have to be catastrophic, with an ending of biblical proportions. Not only that, but those in cash would also have to make immediate constant gains and have that continue for years afterwards, just to keep alongside in dollar value terms those who remained invested in productive business assets all these years.

The odds of a biblical sized catastrophe and timing it close enough to exit, then re-enter at the gloomiest most negative point, compared to hanging in and not getting spooked, are very low indeed."
https://www.goodreturns.co.nz/articl...or+19+Mar+2024

[kiora]

"Wrestling the gorilla"
"Despite incessant commentary to the contrary, the US economy is the strongest it has been in over 30 years"
" It’s very important with this in mind to note that factually, when everything seems bleakest it is uncannily common for it to be at its brightest.

Let’s look at the economic gorilla of the world – the USA. At the end of 2022 and early 2023, most managers, economists and commentators warned that bad times lay ahead. Here are 8 key indicators that show that for last year and indeed for at least 30 years, the US has never been in better shape."
"Will the good times end?

Perhaps it’s best said by that infamous barman from the 1980s movie ‘Cocktail’...
“Everything ends badly otherwise it wouldn’t end.”

The unknown but most essential question is of course when?
For those in cash, and there has been a lot sitting on the sidelines for years now, bad times would have to be catastrophic, with an ending of biblical proportions. Not only that, but those in cash would also have to make immediate constant gains and have that continue for years afterwards, just to keep alongside in dollar value terms those who remained invested in productive business assets all these years.

The odds of a biblical sized catastrophe and timing it close enough to exit, then re-enter at the gloomiest most negative point, compared to hanging in and not getting spooked, are very low indeed."
https://www.goodreturns.co.nz/articl...or+19+Mar+2024

[kiora]

https://www.cnbc.com/2017/10/17/how-...-mistakes.html

Legendary investors Warren Buffett and Peter Lynch have both used versions of the quote: Selling your winners and holding your losers is like cutting the flowers and watering the weeds

[kiora]

"When Adam Smith met Warren Buffett
History rhymes because human nature never changes. It's a fact worth remembering in today's stretched markets"

"No matter what role the investor has started with, in a climax on one side or the other the role melts into the crowd role of greed or fear. The only real protection against the vagaries of identify-playing, and against the final role of being part of the crowd when it stampedes, is to have an identity so firm that it is not influenced by all the brouhaha in the marketplace.
…the end object of investment is serenity, and serenity can only be achieved by the avoidance of anxiety, and to avoid anxiety you have to know who you are and what you’re doing."

https://www.livewiremarkets.com/wire...TING%20LESSONS

[kiora]

Who dares wins,play the odds
As long as an investor can stay in they will came out ahead given these odds.

"“Given a 10 percent chance of a 100 times payoff, you should take that bet every time.”"

Aportioning % of a portfolio to start with could be sensible as well !!!
Then NOT rebalancing the portfolio if an investment becomes oversized
But it also means adding to it as 'milestones' are reached

https://finance.yahoo.com/news/jeff-...203012780.html

Jeff Bezos, the innovative force behind Amazon.com Inc., has never been one to think small or play it safe. In his 2016 shareholder letter, he used a relatable metaphor that captures the essence of success in investing: “We all know that if you swing for the fences, you're going to strike out a lot, but you're also going to hit some home runs.”


Striking Out Is Part Of The Game: The Price Of Growth
Taking big swings in your portfolio, whether it’s investing in a high-growth stock or pursuing an alternative asset class like real estate, comes with a high chance of encountering short-term volatility or temporary losses. Just like a baseball player can’t guarantee a hit every time at bat, setbacks are inevitable on the path to building long-term wealth."

https://finance.yahoo.com/news/jeff-...140013492.html

Baseball players aren't going to make a home run if they don't take a big swing

[kiora]

I wouldn't get to excited about these two but good themes

"How to identify the best ASX tech stocks"

"Drivers of outperformance
High future earnings potential
Potential for analyst upgrades
Margin surprises"

Tech can continue to outperform
Strong earnings growth will in all likelihood be the main driver of continued outperformance in the sector. Additionally, potential rate cuts by the Fed later this year and the likelihood of lower bond yields could create a tailwind for growth-company valuations. These factors combined suggest tech stocks are well-placed to keep outperforming the broader market over the medium-term.

While some tech companies are becoming somewhat expensive relative to their earnings growth outlooks, there are still attractive opportunities at reasonable valuations that are well placed to outperform over the medium term.

The multifaceted approach to stock selection
Many investors get deterred by the high multiples tech stocks command. Relying on earnings multiples alone is unwise, which necessitates a more multifaceted approach when assessing tech company valuations.

The ASX 200 IT index only captures a portion of Australian tech. Many tech-driven companies reside in other sectors like media, consumer discretionary, financials, and real estate.

To identify the best ASX tech stocks:

Consider the stock's valuation relative to its longer-term growth potential. We can use the PEG ratio (price-to-earnings divided by 3-year earnings per share growth) to do this.

Evaluate how much future growth is already priced into the stock. A high PER in 3-5 years’ time suggests the market has already priced a lot of the growth.

Identify earnings upside surprise. Look for factors that could lead to the company increasing its earnings in excess of what analysts expect.

Financial Health. Look at other factors such as balance sheet, higher ROE and margins to ascertain the amount of profits that can be reinvested back into the business or used for acquisitions.

Figure 4: ASX tech screen. PEG offer a good starting place, but earnings quality, balance sheet and earnings upside are an important overlay.
https://www.livewiremarkets.com/wire...20TECH%20PICKS

[kiora]

Arbitrage:Not a simple as it sounds?

https://www.livewiremarkets.com/wire...m=LOVE%20STORY

Got to admire Mungers responses:“Charlie’s sign off after we’ve talked about an arbitrage commitment is usually: “Okay, at least it will keep you out of bars””.

"This is not how Charlie nor I wish to spend our lives. (What’s the sense in getting rich just to stare at a ticker tape all day?)”."