Wednesday, December 2nd, 2009
Every one one us has limited bandwidth for analysis of data. We pick and choose a few ideas that seem to work for us, and then stick with them. That is often best, because good investors settle into investment methods that are consistent with their character. But every now and then it is good to open things up and try to see whether the investment methods can be improved.
For those that use market indicators, this is the sort of book that will make one say, “What if? What if I combine this market indicator with what I am doing now in my investing?” In most cases, the answer will be “Um, that doesn’t seem to fit.” But one good idea can pay for a book and then some. All investment strategies have weaknesses, but often the weaknesses of one method can be complemented by another. My favorite example is that as a value investor, I am almost always early. I buy and sell too soon, and leave profits on the table. Adding a momentum overlay can aid the value investor by delaying purchases of seemingly cheap stocks when the price is falling rapidly, and delaying sales of seemingly cheap stocks when the price is rising rapidly.
Looking outside your current circle of competence (more…)
Tags: asset classes, bevy, cheap stocks, competence, driven money, fed model, flow rate, investment methods, investment strategies, investor sentiment, market indicator, market indicators, metrics, money flow, motives, price momentum, sector fund, sector weightings, short interest, value investor
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Wednesday, September 9th, 2009
When reading Berkshire Hathaway’s annual letters or hearing him speak, one can always take away a few great quotes from value investor extraordinaire Warren Buffett. It should come as no surprise that he is so good at dishing out words of wisdom. After all, he is known as the Oracle of Omaha. We thought it would be prudent to assemble some of his best advice in one cohesive post.
1. “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1″
2. “In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world. A right-thinking duck would instead compare its position after the downpour to that of the other ducks on the pond.”
3. “The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable.”
4. “Be fearful when others are greedy. Be greedy when others are fearful.” (more…)
Tags: 1950s, berkshire hathaway, brilliance, downpour, ducks on the pond, fact that people, folly, full of greed, investment performance, oracle of omaha, peanuts, quacks, quality merchandise, reading berkshire, right thinking, torrential rainstorm, value investor, warren buffett, wonderful company, words of wisdom
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