Nuggets of Investing Wisdom

Nuggets of Investing Wisdom

A website for serious investors in common stocks

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Part 7: Building and Managing a Portfolio

The Achilles heel of the quantitative analysis of stocks

  • by Rodney Smith
  • Posted on March 6, 2023March 6, 2023
  • Part 7: Building and Managing a Portfolio

Something that knocks the pins out from our normal understanding of price earnings ratios, return on invested capital, discounted cash flow analysis, smart beta/factor ETFs, value at risk models (VAR) and even company financial statements

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KISS, diversification and balance

  • by Rodney Smith
  • Posted on January 29, 2023January 29, 2023
  • Part 7: Building and Managing a Portfolio

Mathematical models that show price correlation will give precise answers but aren’t useful

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Watchlists can be a waste of time

  • by Rodney Smith
  • Posted on January 22, 2023January 23, 2023
  • Part 7: Building and Managing a Portfolio

But I am not building up a baseball bullpen of game-ready companies

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Fifty years – Beaten the market

  • by Rodney Smith
  • Posted on January 8, 2023January 23, 2023
  • Part 7: Building and Managing a Portfolio

It’s amazing that 2% makes such a big difference

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Conventional diversification makes no sense

  • by Rodney Smith
  • Posted on October 10, 2022October 10, 2022
  • Part 7: Building and Managing a Portfolio

The concerns which fail are those which have scattered their capital, which means that they have scattered their brains also. They have investments in this, or that, or the other, here, there and everywhere

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The search for a better guide to stock values

  • by Rodney Smith
  • Posted on October 2, 2022October 3, 2022
  • Part 7: Building and Managing a Portfolio

Can we improve on the accuracy of these estimates by obtaining estimates from, say, 22 leading investment banks and averaging them?

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The Equity Risk Premium and what to use it for

  • by Rodney Smith
  • Posted on August 21, 2022August 21, 2022
  • Part 7: Building and Managing a Portfolio

On this basis it could be argued that, at that time, since expected returns were well below historic norms, prices were too high.

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The best number of stocks to own

  • by Rodney Smith
  • Posted on July 19, 2022July 19, 2022
  • Part 7: Building and Managing a Portfolio

Too much of a good thing can be wonderful

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A time of maximum pessimism

  • by Rodney Smith
  • Posted on July 10, 2022July 10, 2022
  • Part 7: Building and Managing a Portfolio

So we search for those things that other people are selling and then if the problem or adverse outlook is temporary we buy them and hold them patiently for years until the public changes its mind.

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Scatter shot estimates of fair value

  • by Rodney Smith
  • Posted on July 3, 2022July 5, 2022
  • Part 7: Building and Managing a Portfolio

A group with a high anchor were prepared to pay three times as much for the same wine as a group with a low anchor

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