Investing Strategy

  • 11 Dec
    Sunday Edition: Pigs Get Fat – Hogs Get Slaughtered

    Sunday Edition: Pigs Get Fat – Hogs Get Slaughtered

    The saying I’m using for today’s headline gets used in a lot of different settings, so the odds are pretty good that just about everybody has heard it at one time or another. When I started to learn about directional, short-term trading strategies like swing and trend trading, I had this idea drilled into my head to reinforce the mindset that acting quickly on exit signals, especially if I was profitable, was far better than waiting on the mere hope the stock might keep moving in my favor and give me a bigger profit. It was useful to me then because it helped me start to learn and develop the discipline to disconnect my emotions as much as possible from the investments I made. More →

  • 07 Dec
    Want To Be A Better Than Average Investor? Sven Tells You How

    Want To Be A Better Than Average Investor? Sven Tells You How

    • Average investors don’t even make 50% of the market’s return.
    • The stock market looks simple in hindsight, but behavioral issues stop us from doing the right thing. We’ll see how by looking at an example with Wal-Mart.
    • To make market returns you have to do nothing. But to make above market returns, you have to do what others aren’t willing to do.

    Introduction

    According to Dalbar, average investors don’t do as well as the general stock market. In fact, they don’t come even close. More →

  • 01 Dec
    The Chinese Are On A Buying Binge. Will Your Portfolio Benefit?

    The Chinese Are On A Buying Binge. Will Your Portfolio Benefit?

    • Positive long term outlooks, sharp technologies, interesting metals, and strong brands are what the Chinese are looking for.
    • The boom in Chinese acquisitions isn’t expected to stop as economic growth and development continues.
    • The Syngenta AG acquisition offer was made at a valuation over 30.

    Introduction

    We all know China has been growing rapidly in the last 30 years. What many don’t know is that through this growth, China has become the second largest global economy and is expected to become the largest global economy by 2030. More →

  • 30 Nov
    Think You’re Comparing Apples To Apples? Think Again.

    Think You’re Comparing Apples To Apples? Think Again.

    • This article is a warning for novice investors and a reminder for experts.
    • When investing, nothing can be taken as a certainty as all are moving parts, especially financial metrics and prices.
    • Comparing current prices to past prices doesn’t help much, while understanding the fundamentals does.

    Introduction

    Investing shouldn’t be a comparative profession, but that is exactly what we do. We try to find the best stocks by comparing one to others, the best financial vehicle for our investments by comparing the options available, or we compare current prices with those of the past.

    Unfortunately, comparative analysis more often than not gives us poor risk-reward assessments. In this article, we’ll discuss the pitfalls of comparative investing and what can be done to avoid making unnecessary mistakes. More →

  • 25 Nov
    Want To Know What Your Returns Will Look Like In 17 Years? Buffett Has Some Insights

    Want To Know What Your Returns Will Look Like In 17 Years? Buffett Has Some Insights

    • We’ll discuss the primary reasons behind long term returns on investments.
    • With interest rates being close to zero, we have to exclude lower interest rates benefiting future returns.
    • General market conditions create a negative asymmetric risk reward situation, but there is a better option.

    Introduction 

    With the Dow passing 19,000 and the S&P 500 passing 2,200 points, it’s time to take a look at the markets, investors’ expectations, and the real possibilities that those expectations will be met. More →

  • 21 Nov
    Asymmetrical Risk Reward – What It Means For You

    Asymmetrical Risk Reward – What It Means For You

    • “The essence of portfolio management is the management of risks, not returns.” – Benjamin Graham
    • You should rethink your stocks and bond holdings as most have negative asymmetric risk reward.

    Introduction

    Asymmetrical risk reward is the essence of investing in stocks, and is also essential for those who want to beat the market.

    In today’s article, we’ll discuss what it is, what investment vehicle has the best asymmetrical risk reward opportunities, and how you can apply its benefits to your investments. More →

  • 18 Nov
    Global Risks Look More Like Opportunities

    Global Risks Look More Like Opportunities

    • From an investing perspective, global risks represent more of an opportunity than real risk.
    • Some chain reactions might still arise from fiscal risks in Europe while many global risks are of a short-term nature.

    Introduction

    Each year, the World Economic Forum (WEF) publishes its Global Risk Report. It’s a great, comprehensive analysis to look at to better understand the world we are living in.

    Today we’ll analyze the global risks from an investing perspective and will arrive at interesting conclusions. More →

  • 17 Nov
    What Buying Olive Oil In Italy Can Teach You About Value & Price

    What Buying Olive Oil In Italy Can Teach You About Value & Price

    • Everybody knows the price of a stock, but few know the actual value.
    • There are a few things that can help you when buying undervalued assets.
    • To determine if you’re investing in a good undervalued investment, consider the company’s probability of bankruptcy.

    Introduction

    This summer, I was in Italy and buying some olive oil. As we use mostly olive oil in our kitchen, I bought 10 liters of this special oil, enough to last for a few months. More →

  • 13 Nov
    Sunday Edition: The Art Of Contrary Thinking

    Sunday Edition: The Art Of Contrary Thinking

    I bought my first shares in a publicly traded company in ‘95, as a 22 year old college dropout. I can’t remember the name of the company or the ticker.

    What I can remember is that it was a hot tip from a friend and a pink sheet stock, although at the time I didn’t know what that meant. Yes, the company went out of business and I lost $2,000 bucks.

    Back then I was eager to learn and devoured every book I could get my hands on, that I believed held the key to getting rich in the stock market. More →

  • 10 Nov
    Why You Should Switch To Active Investing Now

    Why You Should Switch To Active Investing Now

    • PE ratios in the S&P 500 are all over the place; 7 of the top 20 stocks have PE ratios below 15, 7 from 20 to 30, and 5 above 30.
    • You can buy stable, growing businesses at PE ratios below 15, so why would you stick to passive investing and buying riskier stocks at PE ratios of above 20?
    • Maybe you think passive investing meets the definition of “boring,” something investors such as Buffett advocated. I don’t wish you the excitement of watching your portfolio fall from a PE ratio of 24 to a PE ratio of 15. Therefore, think about rebalancing now before it’s too late.

    Introduction

    Yesterday we discussed how the economy is doing well but that the market isn’t responding accordingly. This is because of the high valuations where only exceptional catalysts can push the market higher while any kind of negative news easily brings it into negative territory. However, by analyzing recent earnings, we have found large discrepancies among sectors in revenue and earnings growth. We understand this is normal for a well-diversified portfolio, but do we have to own more of the overvalued stocks and less of the undervalued stocks as a market capitalization weighted index fund does? More →

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