The rise of passive investing and systematic investing may lead to greater stock market inefficiency. It will have little negative impact on active investors.
The behavioral tail can wag the statistical dog
The various Principles of Operation that follow are not things I have dreamed up. They are frequently quotes or exact formulations or wording from Benjamin Graham, Warren Buffett, John Templeton, Philip Fisher, Peter Lynch, John Neff, Maynard Keynes and others.
Even with overly optimistic earnings estimates companies regularly ‘beat’ the estimates. What gives?
What mattered most was confidence in one’s own judgment, from which would flow the Kiplingesque cool to keep one’s head ‘when all about you are losing theirs’
I am not attuned to this market environment, and I don’t want to spoil a decent record by trying to play a game I don’t understand just so I can go out a hero.
The main benefit of optimism is resilience in the face of setbacks
Investing based essentially on the business cycle outlook is a fools’ game.
Is buying with a margin of safety really the closet practice of market timing?
The cash in the portfolio may be enough to take advantage of the opportunity. Or it may not be enough. It doesn’t matter. The investor is in the delicious position of comparing the new opportunity with all other holdings in the portfolio.