No, please provide examples.
Again i would love to see examples of how making wrong choices and bad bets the majority of the time can give you positive expectancy.
And what has any of this to do with Long Term Investing?
Your not thinking are you So C?
(1) Wrong 7 out of 10 trades losing 20% each time.
Right 3 out of 10 trades gaining 70 % each time.
So profitable.
(2) Right 7 out of 10 trades winning 20% each time
Wrong 3 out of 10 trades losing 70 % each time
So your not profitable.
What's this got to do with long term investing.
I'd have thought it was/is obvious. But perhaps
I'm in the wrong 50% of idiots.
Hi Craft,
Thank you for the response. Food for thought.
-How long should the average equity investor persevere attempting to achieve excess returns before admitting defeat and using an index tracker or a simple value portfolio? Not everybody is going to "beat the market" and in the long term the aim is to achieve the highest returns for the least risk. I think this is a worthy discussion point in a thread about long term investing.
Cheers
Oddson
These days, I'm not looking for capital growth as such and yet I find it ends up being relatively easier to achieve than it was when I was actively chasing it.
tech i know the math, what i want to see is how its done in the context of "easy money" i don't consider the discipline of a strict trend following system to be easy, accepting that 65% + of your trades are losers cannot be easy.
So C
You seem to have stirred the pot with your big picture. If your stock selection was random then I would tend to agree with most of the comments - however your stock selections are not random and I think that needs to be considered.
Firstly you mention low price – This low price aspect is a major difference over technical entry which takes whatever market price that may prevail following an entry signal. This aspect needs to be considered when thinking about how long you may be underwater. Hopefully your low cost entry calculations would keep you from starting to accumulate Mirabela at $7 or Billabong at $14 etc
Secondly – although you are not explicit about it in the above paragraph I expect from other things you write that you have a quality aspect to the stocks you pick – This aspect should have a big impact into your results as well, ensuring you don’t average into something terminal like ABC Learning or Babcock and Brown etc.
The freeing up of capital to redeploy just because you come into profit is probably the most different aspect to what I do but I can see the logic for it IF you have identified a better business at a lower price to invest in.
I think your system will only work with high quality and low price stocks. How do you ensure you get these two points right? Explain adequately how you manage these two points and you might (should) ease the concerns of constructive critics.
UMike and myself were the only 2 buyers, [how do you know this?] everyone else (yourself included) wanted to talk about bond yields.
I would have thought talking about a company rather than personal transactions is probably much more relevant to a stock thread.
Hi Oddson - my answer to your question is along simillar lines to smurfs very good post just before yours.
If the journey is more important to you then the result - then you are much more likely to get the result.
Personally there was never any question for me, participation was more important then the scorecard - except to the extent that the scorecard could stop me from playing. As it turns out process is what really matters in investing so concentrating there defaulted in the right result and all was sweat with the world. If it hadn't I would have kept trying so long as I could rub a few bucks together to pay the entry fee.
edit - not sure I really answered the question clearly - try this.
If you are doing it for the result – give up straight away you probably don’t have the right motivation to do what it takes to learn how to outperform.
If you are doing it because there is nothing in the world you would rather do regardless of the outcome then perceiver because your motivation will let you find a way.
What would be of interest to this thread is if investors would post some simple long term investing ideas that require minimum portfolio management (e.g. High Yield Portfolio from the Motley Fool UK website)
Has anybody attempted to run a random selection as a portfolio? Or just use a shotgun approach to buy resource stocks or stocks below NTA?
Cheers
Oddson
I agree, I am very interested in this too, I am torn about 3 ways at the moment! Try to learn to be a good value investor, use a service like Nick Radges and a momentum trading system, or as you say accept that the best risk/reward matrix for me may be some sort of index tracking, and long term invest and dribble feed with disposable income.
... I'm in a similar bind with NAB. The shares are up nearly 20% since I bought them last month, but grossed up yield is still a tad over 9%. ...
... the market has sprinted a bit too hard and will need to have a breather shortly, ...
Craft,
I get your point but I think you are missing the point I am trying to make. Take sport for example, even if I practiced soccer every night for 10 years I would not get a place on professional soccer team - why? Because I am too old and do not have the necessary soccer skills. Investing is the same, it does not matter how much you practice you may not have the time or the skills to succeed.
The time point is a good one. Much better to be putting in the yards when you’re young and have the time for compounding to work on any excess return you can achieve."In the long run, we are all dead" - there must come a point where it is actually best not to attempt to achieve excess returns due to the effort required for the reward (Compounding obviously takes it time to really make that difference)
Don’t think you are being difficult – you make very good points.Please understand I am not being difficult, but you must admit there is a cut-off point where if "stock picking" investing is not working (profitable) it is best to try something else. In my case I have thoroughly enjoyed the journey, it has been an amazing learning experience - but if I can beat my returns using an index tracker/simple value portfolio I would be in error not to use these investment tools because in the long-term this will most likely bring me the greatest return. I do believe in value investing I just do not think everybody can apply it successfully in the long run - this is a risk.
I agree, I am very interested in this too, I am torn about 3 ways at the moment! Try to learn to be a good value investor, use a service like Nick Radges and a momentum trading system, or as you say accept that the best risk/reward matrix for me may be some sort of index tracking, and long term invest and dribble feed with disposable income.
From my re-read of the thread UMike and myself were the only buyers stating that we had bought and at what price, i think these sort of declarations add credibility....i mean just look at all the people now declaring that they have been in this rally for months.
Post it in real time or it didn't happen....burglar on page one of this thread said that no one ever calls a stock cheap, well i buy cheap stocks and i bought QBE for $11 and i posted about it.
I agree, I am very interested in this too, I am torn about 3 ways at the moment! Try to learn to be a good value investor, use a service like Nick Radges and a momentum trading system, or as you say accept that the best risk/reward matrix for me may be some sort of index tracking, and long term invest and dribble feed with disposable income.
Hi Galumay,
Why not have a trial period with each of the ways and see how it goes? In the last couple of years I found out the following:
1. I cannot short term trade for toffee.
2. I am a contrarian.
3. I am not patient.
Cheers
Oddson
I guess the problem with a trial for long term investing is that i will be dead by the time i prove my strategy and then implement!!
Are your dot points 1 & 3 not at odds with each other and if so how do you reconcile!?
Thanks for the lecture in credibility - but if it's all right with you I will just stick with thinking diligent research and thoughtful analysis gives rise to credibility. Feather weight opinions and small sample ‘look at my actions’ don’t do it for me.
SC: I don't think posting your buys necessarily adds credibility. IMO,the process matters just as much, if not more, than the result.
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