Investing Strategy

  • 31 Jan
    Where Most Investors Stumble

    Where Most Investors Stumble

    • Are you a speculator or an investor? Speculators usually don’t survive more than one economic cycle while investors reach decent returns.
    • It’s of extreme importance to distinguish whether an asset is an investment or a speculation.
    • We’ll list 11 characteristics of successful investors, and 13 characteristics of unsuccessful investors.


    Last week, we discussed Seth Klarman’s performance and approach to investing.

    Today, we’re going to dig into his book Margin of Safety – Risk-Averse Value Investing Strategies for the Thoughtful Investor. As it’s a very rare and expensive book full of extremely valuable insights, I believe our readers will find huge value in this series of articles. More →

  • 26 Jan
    The Only Way To Beat The Market In The Next 10 Years

    The Only Way To Beat The Market In The Next 10 Years

    • Investment performance has to be assessed through a complete economic cycle in order to reach the highest possible long term value.
    • In this century, stocks have performed poorly from peak economic cycle to peak economic cycle.
    • Analyzing fundamental risk against the recent performance of the S&P 500 shows us that those who are long the S&P are practically accepting long term negative returns for momentum created short term positive returns.


    Recently, we analyzed Seth Klarman’s amazing performance and investing rationale. There were some pretty difficult things to digest, like the fact that he underperformed the S&P 500 by 50% in the late 1990s.

    But this leads us to some very interesting questions: Do we properly measure investment success? Is the investment manager that invested in internet stocks in the period from 1996 to 1999 a good manager? Similarly, is the manager that created wonderful returns in the last 7 years by being long U.S. stocks a good manager? More →

  • 25 Jan
    Is Your Concept Of Risk Wrong?

    Is Your Concept Of Risk Wrong?

    • Risk is an elusive concept. I’ll describe the various characteristics of it.
    • I firmly believe that low risk is related to high returns and high risk to low returns, just add an often-disregarded factor in investing – price.
    • We’ll conclude with investing options that lower your risk and increase returns.


    In order to be good investors, through economic cycles and stock market booms and busts, we should first focus on risk and only then on potential rewards because it is much easier to create long lasting positive returns if you can avoid losing money.

    At the moment, the majority of market participants look at the stock market as if it is destined to only go up because stocks have historically had the best returns and the pain from the last financial crisis has been quickly forgotten. More →

  • 23 Jan
    On Seth Klarman & His <i>Margin of Safety</i>

    On Seth Klarman & His Margin of Safety

    • Understanding value is just the beginning of profitable investing.
    • Would you be able to hold, on average, 33% of your portfolio in cash with peaks above 50%?
    • Studying human behavior through history is what the best hedge fund managers do.


    Seth Klarman’s book Margin of Safety – Risk-Averse Value Investing Strategies for the Thoughtful Investor sells on Amazon (NASDAQ: AMZN) for $1,992.92 new, and $792.33 used. It’s priced that high because it is a collector’s item that was printed in a small run.

    I believe Klarman would agree that it’s better to invest in stocks than to pay that much for a book. I agree and didn’t want to wait for the book turn up at the library, but I finally managed to get a copy.

    I’ll analyze the book, see what is still relevant today as the book was published in 1991, and share Klarman’s insights with you in a series of articles. Before we start with the book, I’ll start with some insight on Seth Klarman, his investing technique, performance, and general view on investing. More →

  • 18 Jan
    Get Ready: ETFs Could Shake The Market Like 2008

    Get Ready: ETFs Could Shake The Market Like 2008

    • ETFs have the potential to shake the markets similar to how subprime debt and CDOs did.
    • Potential risks come from illiquid underlying assets on secondary markets and poor capital allocation.
    • However, this should also create amazing individual investing opportunities for those who are ready.


    Last week, we discussed the best way to use ETFs in 2017, and I warned a bit about herd behavior. Today we’ll dig deeper into overall financial market risks and/or—depending how you see it—the amazing investing opportunities that a reversal in the ETF trend could create. More →

  • 15 Jan
    Sunday Edition: A Deep Dive On High Dividend-Paying Stocks

    Sunday Edition: A Deep Dive On High Dividend-Paying Stocks

    As you know, dividends are one of the primary points of focus of the Rebel Income and Retirement Revival investing systems. I’ve written in the past about why I think dividends should be an intrinsic part of a successful income generation system, and why dividend-paying stocks generally have a stronger fundamental profile than stocks that don’t pay a dividend. I’m calling today’s article a “deep dive” because I’ve noticed a lot of buzz in the media lately about high-dividend stocks. There’s a real temptation to focus on stocks paying the highest dividends possible, but the truth is that sometimes that high dividend is really a warning sign of risks that you need to be aware of. More →

  • 13 Jan
    Are You Part Of The Herd?

    Are You Part Of The Herd?

    • The current market has all the symptoms of herd behavior: safety in numbers, lack of proper information, and absence of competitive edge.
    • Market timing and contrarian investment strategies are tempting because of the high rewards, but fundamental value investing is what wins in the long term.
    • We’ll discuss markets that look safer and are much cheaper than the U.S.


    Yesterday we discussed how the situation in the U.S. economy isn’t sustainable in the long term. However, as the economy and the dollar are strong now, U.S. equities have enjoyed another positive period of inflows.

    In the first week of 2017, ETFs had $13.1 billion of inflows in total and the majority of that money ($8.7 billion) went straight into U.S. equities while $2.8 billion went into U.S. fixed income, and only $1.6 billion to international equity ETFs.

    The $8.7 billion going to U.S. equities is a clear indication of herd behavior. More →

  • 09 Jan
    Sven Thinks You Can Be A Millionaire & Tells You How To Get There

    Sven Thinks You Can Be A Millionaire & Tells You How To Get There

    • Investing for the long term isn’t hard and if you avoid doing stupid things, you should expect to be a millionaire when you retire or likely even sooner.
    • Maximize your IRA as it isn’t taxed.
    • Beating the market by a few percentage points leads to staggering differences in 30 years.


    People usually wonder how much money they should put aside and invest in stocks. Should it be 5%, 10% or 15% of your income? Should you put any lump sums into the stock market or not?

    As most of us don’t have clear plans and goals, what happens is that investors invest more when they should invest less and nothing at all when they should go all-in.

    Today’s article will describe the expected end result from investing in stocks, how much your investments will return on average, and how to create a stable strategy in order to not make costly mistakes. More →

  • 08 Jan
    Sunday Edition: Analysis Paralysis & Functional Investing

    Sunday Edition: Analysis Paralysis & Functional Investing

    Have you ever gotten caught up measuring and evaluating multiple sides to an argument or question and found yourself more confused than when you started? It can happen in just about any setting and under just about any context, and I believe that none of us are immune to it, to one extent or another. I guess that in some situations that might be a good thing, because sometimes the best action to take could be no action, but when it comes to investing, I find it to be a real hindrance.

    I learned to think of this phenomenon as analysis paralysis, because when it happens to me I get so caught up in weighing pros and cons, or looking for that one little piece of information that will make my decision obvious that I never actually make a decision; I feel like I can’t do anything until I have put all of the pieces of a puzzle into their proper place. More →

  • 05 Jan
    If You Don’t Own Gold, You Know Neither History Nor Economics

    If You Don’t Own Gold, You Know Neither History Nor Economics

    • The bull case for gold is getting stronger for monetary, fundamental, and technical reasons.
    • Gold miners offer a positive asymmetric risk reward opportunity.
    • However, in the short term, anything is possible.


    I’ve borrowed the title of today’s article from Ray Dalio, the manager of the $150 billion Bridgewater hedge fund.

    Historically I have been against owning gold as it is not a yielding asset. However, after seeing how the global monetary base expands and will probably expand further when the next recession comes along, it’s a good time to contemplate an investment in gold as a hedge against human stupidity and greed.

    Today, I’ll elaborate on the bull case for gold, the risks, investment options, and why I think some of those options have extremely positive asymmetric risks. More →

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