It’s really easy to read and understand the theory behind the market and various phenomena with regards to equities. But you know what’s really difficult? Actually investing. I’m sure this is well known, but there is a big disconnect between your own capital and reading about others. I wrote a blog post in 2018 about three equities: Amazon, Snapchat, and Berkshire. Snapchat tumbled but recovered. Amazon, went berserk and crushed everyone. And well, I still own Berkshire. The point is capital should stick in one place. Continuing to change asset allocation is dumb and difficult not to do. However, I’ve left most of my capital in one spot for my own detriment. See I no longer think past methodologies of finding cheap companies are valid. Mega-cap companies keep becoming more richly valued even as their profits stay the same. Asset Inflation anyone??? But some of these really cheap (current working assets: liabilities) micro-cap companies continue to underperform. Maybe the market in the long run really is a weighing machine, but when do I know if I really am a hundred pounds and not a thousand?? Wow waiting is difficult, very difficult. People might underestimate Buffet but they are wrong. I mean seriously, it is amazing the type of conviction you must maintain to hold a position for forever. Maybe I just lack the same belief in my accuracy that Buffett had. Who knows??
The S&P 500 keeps going up and the Dow is about to hit 30,000. Equity prices have been on a tear. Last year the S&P was up 22% but profits remained steady. Why is this? I believe that the low interest environment created by the European Central Bank (ECB), Federal Reserve (Fed), and Bank of […]
When buying a company as an investor you take a risk. As a value investor, we try to mitigate these risks by understanding the underlying value of a company. If a company were to liquidate, their value in liquidation would be determined by their net tangible assets or their net asset value. By understanding the […]
As I was reading the Little Book of Behavioral Investing by James Montier (which I highly recommend) I came across a passage that described my investment in Nova Lifestyle perfectly. Warren Buffett has described Ben Graham’s (his mentor) investment style as cigar-butt investing – that is, buying really cheap stocks almost regardless of the underlying […]