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Category: Investing

Losing It All Pt.4: Benjamin Graham

Losing It All Pt.4: Benjamin Graham

No series on the mistakes of the world’s greatest investors would be complete without looking at the mistakes made by the Godfather of value investing Benjamin Graham, in the early part of his career. Losing It All Pt.3 Losing It All Pt.2 Losing It All Pt. 1 Graham survived the 1929 crash but only just, and in the years after, he re-built his investing methods around what he had learned at the time and compiled these lessons into his first book,…

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Warren Buffett’s 5 Most Valuable Investment Quotes

Warren Buffett’s 5 Most Valuable Investment Quotes

Five of the most valuable pieces of investment advice Warren Buffett has given over the years. These quotes don’t really need much of an explanation, they speak for themselves. They almost entirely sum up Buffett’s investment strategy in less than 1,000 words. I believe that it’s always worth going back to investment advice like this from Buffett, Munger or Graham on a regular basis to refresh my memory and make sure I’m not drifting off track. Warren Buffett Describes How…

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Investment Analysis And Psychological Barriers Investors Face

Investment Analysis And Psychological Barriers Investors Face

Michael J. Mauboussin’s latest research report focuses on the topic of comparison. Specifically, how investors can improve their comparison process as part of investment analysis. The paper, which you can find here, presents an interesting framework for helping to eliminate bias in decision making. The one thing that stands out for me is the revelation that the primary method of comparison among investors is analogy. As Mauboussin describes: Analogy is an “inference that if two or more things agree with one another in some…

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The Best Investment Ideas Should Be Easy

The Best Investment Ideas Should Be Easy

Following on from my last post (Second-Level Thinking: What Is It And Why You Need It) I wanted to take another look at investing psychology, specifically, the emotional bias associated with investment research. Investment ideas should not require a lot of work Researching a stock is a critical part of the investment process, but if you’re not careful, you’ll end up convincing yourself to buy the stock, rather than buying based on fundamental research. To explain further, I’m going to…

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Second-Level Thinking: What Is It And Why You Need It

Second-Level Thinking: What Is It And Why You Need It

Understanding the numbers is just one part of investing. To be a successful long-term investor, you need not only understand the numbers but also the psychological traits required to be able to capitalise on your analysis. Personally, I believe that understanding psychological drawbacks/benefits of investing is more important than being a numbers person. If you can’t control your emotions, no matter how much work you put into researching an opportunity, it will all be for nothing. Howard Marks, the CEO, and founder…

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Don’t mistake a lack of volatility for low risk

Don’t mistake a lack of volatility for low risk

“Beta is a more or less useful measure of past price fluctuations of common stocks. What bothers me is that authorities now equate the beta idea with the concept of risk. Price variability yes; risk no. Real investment risk is measured not by the percent that a stock may decline in price in relation to the general market in a given period, but by the danger of a loss of quality and earnings power through economic changes or deterioration in…

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How to Invest the Lazy Way and Beat the Average Investor

How to Invest the Lazy Way and Beat the Average Investor

As I covered in my post on diversification last week, data shows that the chance of finding a long-term winning stock is only around 7%. With this being the case, it makes sense for most investors to hold a selection of tracker funds in their portfolios, rather than trying to beat the market by picking stocks. As the odds are heavily stacked against you, what’s the point of putting in the extra time and effort to find winning equities? Warren…

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Why You Need To Diversify: The Chance Of Finding A Winning Stock Is Just 7%

Why You Need To Diversify: The Chance Of Finding A Winning Stock Is Just 7%

  Investing can be a great way to make your money work harder for you. Over the past 100 years, US and UK equities have returned around 7% to 9% per annum. £100 a month invested at 9% per year will grow to approximately £1.2 million over five decades. However, most investors fail even to make market average returns because it’s so difficult to pick stocks. How to make the most of your skills The world’s best investors have made…

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Warren Buffett Describes How To Pick Stocks

Warren Buffett Describes How To Pick Stocks

Warren Buffett is the greatest investor alive today. After starting with a strategy based on value investing, Buffett’s investing has developed over the years to a more quality-based style, a change that’s produced huge returns for both himself and investors of Berkshire Hathaway. Buffett wasn’t born with all of his investment acumen. Over the years his strategy has developed and changed with experience into what it is today. “In my early days as a manager I, too, dated a few…

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