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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Difco who wrote (43369)	7/17/2011 9:21:26 PM
From: Paul Senior	Respond to of 78464

The 1 in 60 large black swan: Of course, it's in retrospect so nobody a-priori (i.e. in advance) can predict which will be that large black swan. If the success of the person's black swan strategy is ultimately dependent on number of positions held (because predicting which individual company/stock will be a swan is not really likely, so a basket has to be chosen), then at bottom the person seems to be saying that he found one really good black swan in 60 positions. So what would be the chance of again finding another such swan in the next 60 picks? I claim it could just as easily be no such stock will be found as one stock will be found. Maybe he could have two. Less probable, I assume would be that he would find three or more that stand out. (based on the 1 in 60 in this first set) The possibility of none though prevails in my mind. By the way I look at these things (and that's just me), the person couldn't and shouldn't put 1/4 of his portfolio into one or a few such picks if he's using swan expectations as a basic strategy. Rather, the person should have more picks to up the likelihood of finding more swans. That is, instead of about 60 picks at $16K each, more like 120 @ $8K or 180 @ $5.3K. This will give the person - maybe- more shots at more swans. Perhaps expecting two for 120 positions, or maybe 3 or 4 - or maybe just one. Less of a likelihood of finding none at all (less likelihood of zero with 120 picks than if "only" 60 picks were made). Of course some assumptions in here, such that 120 picks are available with the same criteria that the poster used for the 60. From what I see so far, for the individual investor to be tied up with 60 or 120 stocks for just this one strategy, doesn't seem practical or worthwhile. Jmo of course.

To: Difco who wrote (43369)	7/18/2011 3:57:02 AM
From: badi_	Respond to of 78464

I didn't know INSM particularly would make such growth, and because the prices were down for so long is proof that nobody else knew either, and that's kind of edge for me: I seek companies that nobody looks at. What I do is grade a given company on a scale of 10, the grade demonstrates the company's exposure to Positive Black Swans. If you see the portfolio's screen shots you will find that I bought more shares of INSM than any other company, that wasn't an arbitrary decision. See this stock-swans.blogspot.com it is a short list of my picks. Some of the hot ones: ULU : picked at $.04 => now $.55 over +1100% growth in few weeks Important: be advised that I do not recommend investing in one stock in particular, I constitute a Black Swan Portfolio and do not point out to one stock or recommend investing in the short list only. If you want the full list email me, we'll talk.