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

To: Jurgis Bekepuris who wrote (56499)	12/31/2015 7:32:03 PM
From: Paul Senior	Respond to of 78763

it's not even clear that the guys on CoBF outperform consistently and a lot. Afaik, there's no evidence that the more research one does, the better the results one gets. Otoh, all one needs - so they say - is a very few good stock picks to get wealthy. (Assuming one makes the proper commitment (once one finds the right stock(s)) - also easier said than done, imo.) Also, the more research, presumably the more one increases one's knowledge base. I.e researching Ford in depth, likely means you've studied the auto industry, auto stocks, the measures analysts use in evaluating the manufacturers, the suppliers, etc. So you'd be able to quickly turn your focus to say GM or maybe VC or LEA having established a knowledge base with Ford. It's nice when you don't have to spend countless hours on 10Ks/Qs/industry primers/etc./etc. and can have outperformance with less effort. I'm just not sure it works anymore. :) Yes, it's nice. I never feel I've researched so much I'm stuck in the weeds. However, I, too, am just not sure it (surface reviews) works anymore. -- Hasn't for me in past few years.

To: Jurgis Bekepuris who wrote (56499)	12/31/2015 7:47:43 PM
From: Sam	Read Replies (1) \| Respond to of 78763

What is "CoBF"?

To: Jurgis Bekepuris who wrote (56499)	12/31/2015 8:10:00 PM
From: Shane M	1 Recommendation Recommended By Jurgis Bekepuris Respond to of 78763

There are a lot of people on CoBF who do much more in depth DD on stocks and companies than people here on SI. I think that participating in SI gives a wrong impression that you can do lightweight two paragraph DD, use a Buffettology formula or two and easily outperform indexes. I had that impression for 10+ years. Then I went to CoBF and wow did I get outclassed. It's like going from a high school basketball team to NBA. And the problem is: it's not even clear that the guys on CoBF outperform consistently and a lot. Anyway, I'm not picking on you or Shane or anyone else. If your methods work for you - great. It's nice when you don't have to spend countless hours on 10Ks/Qs/industry primers/etc./etc. and can have outperformance with less effort. I'm just not sure it works anymore. :) I learned probably 10-15 yrs ago that in depth drill-downs on stocks were not where my interests or strengths were. Don't get me wrong, I enjoy reading the reports from analysts that do that, but I realize it's currently not a strength I have and I haven't worked on it in a long time. I'm sure I drill down less now than I used to and instead focus on quantitative strategies, process, qualitative assessments, and behavioral aspects of investing. But you're right, it's possible the quant approach may no longer work going forward, but we won't know for a while. There's a lot of good reasons to think the biases in the market that have existed in the past might be eliminated going forward. edit: My last major effort at an industry drill-down was the energy sector earlier this year. It just hasn't worked out so well for me so far :-)

To: Jurgis Bekepuris who wrote (56499)	12/31/2015 10:27:08 PM
From: Shane M	3 Recommendations Recommended By Jurgis Bekepuris richardred Spekulatius Read Replies (2) \| Respond to of 78763

Jurgis, related to your post - I wanted to share something I've been thinking about for a while also related to the learning process and investing. I contend that the learning process in investing is "broken" from the way we learn most things, and this likely contributes to why we may not know what key actions contribute to success In most things that we learn we can incrementally adapt to improve our result. Like throwing a baseball, or hitting a tennis ball. We get immediate feedback, make adjustments, try again, gradually improve. It's fairly apparent if our adjustments are improvements or not. With investment, I think the entire learning process is broken - making it extremely difficult "learn" in the traditional sense. Sure, we read books, try to discern what other people found worked in the past (assuming we're willing to just accept what the book tells us), but in practice how many of us really can effectively remember what actions, process, and thinking contributed to a successful investing activity on a stock we bought several years ago? And even then, were we just lucky? All sorts of biases cloud how we remember these things anyway. We have great difficulty being honest with ourselves about both our failings (don't accept enough blame)and successes (take too much credit). Additionally, part of the problem is that results can be so inconsistent/noisy that correct thinking can lead to bad investment results and wrong thinking is sometimes rewarded. Ideally for learning purposes we'd be able to come to an investment decision today, and then hit a button that would tell us the result of that investment decision 1yr, 2yr, 5yr, etc into the future. Then be able to investigate what we got right or wrong. But that's simply not what happens. All the time and changes that occur over time cloud our memory and learning process. As an example of how our memory is flexible (or at least how my memory is flexible) a few years back I had what I considered a mini revelation of this nature. I was performing in a corporate band challenge, and that can be a pretty fun/memorable event - or at least you'd think it would be. But long after the event I watched a video of the performance and was surprised at how different certain elements of the performance were in my memory than than what I saw on video. My conclusion was "wow, I remembered that a lot differently." I think something similar happens in investing - too much time passes and due to flexible memory we have difficult time recreating and learning from our thoughts at a previous time, understanding what the correct and incorrect decisions were and why, what were the important aspects to focus upon, what aspect of decision making contributed to good decisions, and what contributed to bad. And what things we thought that were important simply were not, and what things were important that we didn't consider. And sometimes, even after all is said and done we still might not know if we made a correct decision but got a bad result, or vice versa. I suppose a detailed investing journal is likely the best way to address this issue. I've been keeping one for about a year and a half now trying to archive my thinking so I can learn better - but my interests bounce around so much I'm unsure how useful that will be, but it does include alot of thinking on energy sector at end of 2014 and into 2015 - so that may be a good read to go back and evaluate. I do remember putting a lot of effort into understanding past oil busts, their depth/duration, and how different classes of energy stocks responded during different parts of the cycle. But it's always different, and this bust has been so much longer - so presently it's unclear to me if I made a bad decision to overweight energy, or if I made a good decision, but got a bad result.

To: Jurgis Bekepuris who wrote (56499)	1/1/2016 10:43:19 AM
From: MCsweet	2 Recommendations Recommended By chris714 E_K_S Read Replies (1) \| Respond to of 78763

I like to get input from you and Spec and read CoBF and valueinvestor club boards because some people do dig deeper than I do and find things that I have missed. That being said, I agree that many of those in-depth analyses seem convincing but the stocks don't feel like much greater than 50%/50%. And actually I prefer not to buy stock in which other people have done thorough analyses. To be honest, I focused on a few techniques that seem to work 1. Buy on tax loss selling and failed debt offerings (stock/debt has to be attractive on fundamental basis). 2. Buying exchange-traded debt in front of dividend declaration and ex dates. Small effect, but consistent. 3. Rich-cheap swapping of exchange-traded debt (swap into higher yield of debt of similar credit quality and interest rate risk). Take a lot of time (don't do as much as I should), but this no-brainer approach is pretty easy and effective. 4. Buying based off of stock screens (has gotten harder) 5. Building a long-term relationship with a basket of interesting stocks so that you understand their dynamics. Try to maintain these relationships so that when they get attractive you can spot it and build a large position. 6. Somewhat related to 5, focus on microcap stocks that nobody else follows. For these stocks you want to understand as much as anyone else does about them. For larger stocks it is extremely difficult to get an edge -- don't focus on those as much since it is almost impossible to be the most knowledgeable on those. 7. Be humble and always open to recognizing you are wrong, but be willing to load up when the opportunity arises because there aren't a ton of great opportunities. I use FIdelity to calc my returns. In my main account, for 2015 it looks 8%-9% for me. Average annual returns are 3-years 19%ish (per year) 5-years 13%ish (per year) 10-years 17%ish (per year) Since 1/31/2003 41% (per year) Long-term returns are good because 2003 was 100%+ returns. Awesome year for microcap value. Also much easier to earn on a smaller capital base than I have now :) 5-year returns underperform S&P 500, partly due to a brush with mining and resource companies a few years back and basically allocating less time to my personal investments. I have been trying to allocate more time and bring my relative returns back up. MC