A few things I learned over the past year. 1. Process first, analysis second, margin of safety last A robust process can prevent a poor analysis but a good analysis can still create silly mistakes. Let’s say a stock is an excellent buy for 10 reasons. That’s a good analysis; your judgment comes from facts […]
In my previous post, I wrote that to achieve outperformance or above-average returns, your investment process has to be ‘unconventional’ compared to the majority. And that can only be achieved through originality, independent or contrarian thinking, and making connections from disparate information. Bill Miller, the former Legg Mason portfolio manager, emphasizes the importance of making […]
The stock market is like a pari-mutuel system of horse racing. Everybody goes there to make a bet and the odds change based on what’s being bet. Everyone can tell a quality company has better profitability, higher return on capital than a company with a terrible record. But when you look at the odds, the […]
In tennis, winners in amateur level competitions are often those that make the least number of unforced errors. The same can be said with investing. The number of mistakes you make (and the losses on each of them) determines your long-term return more than how much you make when you win. There are two […]
PDF Version *** When Warren Buffett wrote that investors should have their eyes on the playing field instead of the scoreboard, the emphasis is to focus on what’s hugely important. At the same time, perhaps, his message is more than just how one should use their time, but the peril of constantly checking the scoreboard, […]
PDF Version *** There are two ways to learn to invest. You can study success. What do successful investors do? What do they have in common? What traits contribute to their achievement? You learn through examples by following the path of those who have succeeded. Or you can study failures. Those who lost everything. How […]