Investment Strategies 04 (Apr 19 - Nov 23)

[winston]

Important factors all investors must know

by Koon Yew Yin

All investors must know the following factors:

1 My share selection golden rule

The company must report increasing profit for 2 consecutive quarters and its projected P/E must be less than 10. If you are very sure that the company can continue to produce more and more
profit, you can buy the share at higher P/E ratio.

2 Long term profit growth prospects

The company must have a special skill or a product that is not so easy for competitors to copy.

3 Believe in price charts

4 Long term up-trending stock

5 Never buy a down trending stock

6 The daily traded volume must be liquid

7 All investors must examine their track record

8 The magic wand of margin finance

9 When to sell?

Never sell any stock if the company continues to report increasing profit. Investors must bear in mind that some products are seasonal.

https://klse.i3investor.com/blogs/koonyewyinblog/

[winston]

Two Reasons Rich People Keep Getting Richer

By Dr. Steve Sjuggerud

Rich people...
1. Do their homework. They understand their investments. And they...
2. Avoid the herd mentality. They are good contrarians.

Source: Daily Wealth

[winston]

4 Simple Steps for Finding Superstar Growth Stocks

1. Is it in one of the most exciting growth industries?
2. Is it one of the strongest stocks in that industry?
3. Is the long-term outlook good?
4. Is the short-term outlook good?

When these 4 elements are aligned, it can significantly tip the odds in your favor of finding a great stock, that will generate extraordinary profits over time.

Source: StockNews.com

[winston]

Three Keys to How This Troubled Kid Became One of the World's Richest Investors

By Mike Barrett

Herbert Wertheim: Forbes lists him among the 300 richest Americans alive, with an estimated net worth of roughly $3 billion.

1. He found that the durability of superior intellectual capital creates spectacular long-term investments...

When Apple (AAPL) went public in 1980, Wertheim bought shares. Same with Microsoft (MSFT) in 1986. More than 30 years later, his combined position in the two tech giants – worth hundreds of millions of dollars

2. Wertheim's second valuable insight was that exceptional management breeds high investment conviction...

3. Wertheim's third key insight is to give your ideas time to work but cut your losses when they don't.

If you want to be a successful investor, you must have an exit strategy in place from the beginning. And a simple 25% trailing stop is one of the best ways to get started.

Source: Extreme Value

[winston]

The Fingerprints of a Home-Run Investment

#1: Are you hunting elephants or hunting mice?
#2: Is the company's technology CLEARLY better or MUCH cheaper than its competitor's technology?
#3: Is the business scalable?
#4: How big is your moat? Do you have a big competitive advantage?
#5: How much are you worth?

Source: Investor Place

[winston]

Keep It Simple, Please

by Vishal Khandelwal

In stock investing, often we focus so much on trying too hard that either we never start working on the process of picking up great businesses (seeing the enormity of the task), or we start believing that our immense hard work and knowledge gives us great control over the future of stocks we own.

The reality is that, no matter how hard we try to analyze the intricacies of business, we may not be as important to the results as we'd like to think we are.

Like Seth Klarman wrote in Margin of Safety -

Investors frequently benefit from making investment decisions with less than perfect knowledge and are well rewarded for bearing the risk of uncertainty.

The time other investors spend delving into the last unanswered detail may cost them the chance to buy in at prices so low that they offer a margin of safety despite the incomplete information.

Source: Seeking Alpha

[winston]

Pay Attention

by Vishal Khandelwal

In the story,"The Adventure of Silver Blaze", Sherlock Holmes asked Inspector Gregory to consider a curious incident involving a dog.

Gregory replied that nothing happened, and Holmes proclaimed, "That was the curious incident."

This clue enabled Holmes to deduce that the culprit must have been someone familiar to the victim's dog. Most people would miss this important clue because most people, like Gregory, pay little attention to nonevents.

Now, some information is always available, but some is always silent - and it will remain silent unless we actively stir it up.

In investing, such information that remains silent - or that you fail to notice - can be dangerous to your capital.

To pay attention means to pay attention to it all, to engage actively, to take everything around us, including those things that don't appear when they rightly should.

It means asking important questions and making sure we get answers.

Even when you do this, you may not be able to emerge with the entire situation in hand, and you may end up making a choice that, upon further reflection, is not the right one after all. But it won't be for the lack of trying.

Source: Seeking Alpha

[winston]

Be a Curator of Stocks, Not Warehouse Manager

by Vishal Khandelwal

We spend the first half of our lives adding things, and the second half subtracting most of them.

Investing follows life, and this is also what a lot of investors end up doing. They create crowded warehouses of portfolios in the initial years of their investment careers, realize most of their choices were mistakes, and then they start subtracting vigorously.

Lest you lose out on the positive compounding timeframe, you will do yourself a world of good by respecting and practicing this lesson - of saying no to most things, of not adding a lot of unwanted stocks to your portfolios - early.

In other words, be a curator of stocks, not a warehouse manager.

Source: Seeking Alpha

[winston]

Bharat Shah on Investing Successfully

by Vishal Khandelwal

One of the best theories I have read on the importance of investing in high-quality businesses, in the Indian context comes, from Bharat Shah of ASK Group, who has written a book (sad, it's not available publicly) titled "Of Long Term Value and Wealth Creation from Equity Investing."

I recently came across his old interview where he shared his insights on value investing and how he formed his investment process and principles.

A passage from the interview reads thus (emphasis mine) -

…successful long-term investing calls for two vital technical capabilities or craft and two personality traits.

While craft can be honed and refined by observing and absorbing, character traits have to come from within and be developed.

The two essential skills are: ability to comprehend and grasp the true character and the innards of diverse businesses as well as the ability to value them. Till these abilities are developed, one cannot become a good investor.

The two vital character traits are: discipline (or temperament) and wisdom. Discipline lies in investing only into quality businesses and the temperament of not getting carried away by the fads of the markets and buying such quality businesses only at a meaningful margin of safety.

Source: Seeking Alpha

[winston]

Patience Wins

by Vishal Khandelwal

Most people participating in the stock market don't really understand what they are doing.

This is especially when making money gets quick and easy, and they are doing great at it.

Like Aesop's wolf in sheep's clothing, they play a role contrary to their real character, which often leads them to the slaughterhouse.

However, the lack of patience of such people to invest with a long-term horizon creates the opportunity for the few committed to long-term holding periods.

In the battle between impatience and patience, the latter wins.

Source: Seeking Alpha