Investing & trading: October - December 2012 articles archive home
 
Wrong theories & beliefs
Market models and theories of investment are often based on mathematical convenience rather than empirical evidence. A whole edifice of investment theory has been built on the assumption that market prices are normally distributed. The normal distribution is very handy for analysts because it allows for precise probability-based assumptions.
Tuesday, December 18, 2012 ... more
 
 
Investing, like war
There is no clear-chartered course in the field of investments. Nevertheless there is a rational method of discipline and conduct to be followed that will serve
Tuesday, December 11, 2012 ... more
 
 
A value investor’s advice
Some individual investors have shaken off the trammels of reason. Instead, they have opted to run wild after golden visions, turning to fads, alchemy, and the stars and moon in desperate efforts to increase their wealth.
Tuesday, December 4, 2012 ... more
 
 
Consequences of our biases
Despite the belief that we are logical decision makers our minds are inherently susceptible to many forms of bias – at least 22 according to James Montier’s book, Behavioural Investing: A Practitioner’s Guide to Applying Behavioural Finance.
Tuesday, November 27, 2012 ... more
 
 
Not smart
How often do we hear statements like “Most of the ‘smart money’ is going into energy stocks right now”? Or “Watch what the ‘smart money’ is doing”. It implies that non-professional investors are not ‘smart’.
Tuesday, November 20, 2012 ... more
 
 
By George
Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.
Tuesday, November 13, 2012 ... more
 
 
Buy & hold what?
The concept that 'the market' always comes back is deceptive. The sales pitch for ‘buy and hold’ sounds infallible, but it isn’t. The market might always come back, but that doesn’t mean your portfolio will.
Tuesday, November 6, 2012 ... more
 
 
Nothing to rely on
Financial people usually start off with the best intentions: they go to school, learn a bunch of stuff, then they apply it in the real world, and make good money for a while. Then the money is not good enough, so they apply more and more leverage ...
Tuesday, October 23, 2012 ... more
 
 
What …
… Dan Loeb Has Learned as an investor:

If spending all your time reading research reports and only looking at screen, you will fail. Be well-rounded, travel, study things outside of the narrow topics of finance. If investing was just about numbers, any accountant could do it.
Tuesday, October 16, 2012 ... more
 
 
Lessons ...
... that Bruce Berkowitz wishes he’d learnt long ago:

You have to have cash, especially when no one else has it. “Cash is like a financial valium, it allows you to keep your cool during very difficult times.”
Tuesday, October 9, 2012 ... more
 
 
Scholl’s Rules
In a 1994 lecture Walter Scholls came up with 16 golden rules for investing. Here is an adaptation of those rules:

1. Price is the most important factor in relation to value.
2. Remember that a share of stock represents a part of a business and is not just a piece of paper ...
Tuesday, October 2, 2012 ... more
 
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