Tag: investing

Long term ≠ Always

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always2

Previously, we had highlighted the difference between ‘Long-Term Investing vs. Buy And Hold Forever’ (src) Economies shift, competition catches up, moats wither away. So it is essential to have a periodic review of your portfolio.

Recently, in a post titled ‘The answer is that there is no answer’ (src) we saw the inherent contradictions that exist in asset management.

James Osborne over at Bason Asset Management brings it together brilliantly:

The world is a complex place and how each generation of investors experiences these long term truths may be very different. This is simply a reminder that in some periods, we may have a different experience than these long-term facts.
 
Most importantly we should be aware that “over the long term” doesn’t mean “always” in advance so that we aren’t surprised when we experience the opposite result of our long-term beliefs.

The whole thing is worth a read.

Source: “OVER THE LONG TERM” DOESN’T MEAN “ALWAYS”

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The answer is that there is no answer

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Here are a bunch of excerpts from articles I have been reading that might sway you to conclude that all investment managers are bipolar masochists.

Howard Marks

The truth is, almost everything about superior investing is a two edged sword:

  • If you invest, you will lose money if the market declines.
  • If you don’t invest, you will miss out on gains if the market rises.
  • Market timing will add value if it is done right.
  • Buy-and-hold will produce better results if timing can’t be done right.
  • Aggressiveness will help when the market rises but hurt when it falls.
  • Defensiveness will help when the market falls but hurt when it rises.
  • If you concentrate your portfolio, your mistakes will kill you.
  • If you diversify, the payoff from your successes will be diminished.
  • If you employ leverage, your successes will be magnified.
  • If you employ leverage, your mistakes will be magnified.

Source: Dare to be Great II

Cam Hui

Value works. Growth works. Momentum works. Quality works. They just don’t all work at the same time. A combination of these factors work most of the time, but there are times when a single factor is dominant.

You have to be able to recognize the regime shifts and deploy the right combination of models out of your toolkit accordingly.

Source: A quant lesson from a technician

Herb Greenberg

The worst mistakes often come from being too smart for your own good, especially when putting too much trust in your experience, perspective and instincts.

Lessons learnt:

  1. The rules of retail can indeed be broken.
  2. Never count on the insular feeling of superiority of big, lumbering companies to catch a trend.
  3. Don’t overlook the obvious.
  4. As long as a company has a product customers fall head-over-heels for, the economics don’t matter until the growth stops.
  5. Good execution and a charismatic, brilliant CEO trump making money.

Source: My Worst Mistakes

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Reel Life vs. Real Life

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Jim Jubak, beginning in 1997 and continuing for twelve years, wrote one of the first and ultimately the best-read stock picking column on the Internet, “Jubak’s Journal,” for Microsoft’s MSN Money. His initial boss, a hotshot software guy, said: “If you’re so good as a stock picker why don’t you do what no one else does and issue clear buys and sells and then track the results.” That resulted in what we believe was the first online, daily-priced stock portfolio on the Internet, Jubak’s Picks.Jim Jubak

In 2010, Jubak apparently decided that investment management looked awfully easy and so launched his own fund.

Which stunk. Over the three years of its existence, it’s trailed 99% of its peers. And so the Board of Trustees of the Trust has approved a Plan of Liquidation which authorizes the termination, liquidation and dissolution of the Jubak Global Equity Fund (JUBAX).

Ben Carlson over @awealthofcs notes:

There is a constant barrage of people they throw at you in the financial media, each one a seeming expert in their field. The majority of these people spend their time making endless predictions about stocks, the economy, interest rates, company earnings, etc.

Because these are all intelligent-sounding people, it’s very easy to get sucked into believing every single forecast they put out there. Some will be right some of the time. Most are wrong most of the time.

What’s surprising is not that Jubak setup his own mutual fund, but the fact that it still has $16 million in assets. Go figure…

Source:

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Investing with a Human Touch

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Abhishek, our Chief Technical Analyst, will start blogging about his own personal investments from today. He has seeded his account with Rs. 20,000/- a sum that most retail investors get started with. The idea is to show how you can use the tools provided by StockViz to:

  • Screen for stocks
  • Confirm the right entry point
  • How to manage risk, and
  • When to exit

Wish him good luck!

Follow his posts here.

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