Nuggets of Investing Wisdom

Nuggets of Investing Wisdom

A website for serious investors in common stocks

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Uncertainty

Investing in a permacrisis

  • by Rodney Smith
  • Posted on December 27, 2022December 27, 2022
  • Part 1: The Field of Play

The prophets of doom have overlooked the all-important factor

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Quantitative vs intuitive in investing

  • by Rodney Smith
  • Posted on August 15, 2022August 15, 2022
  • Part 2: Human Foibles and Investment Decision Making

Human decisions affecting the future, whether personal or political or economic, cannot depend on strict mathematical expectation, since the basis for making such calculations does not exist.

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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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Risk when markets are down

  • by Rodney Smith
  • Posted on June 19, 2022June 26, 2022
  • Part 1: The Field of Play

Here were financial people who could seriously consider that stocks are less safe because they have declined in price than they were after they had advanced in price

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Loving lack of visibility

  • by Rodney Smith
  • Posted on March 13, 2022March 15, 2022
  • Part 3: Thoughts for the Individual Investor

Things are almost never clear on Wall Street, or when they are, then it’s too late to profit from them.

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Let’s cut to the heart of how risk and uncertainty impact diversification

  • by Rodney Smith
  • Posted on November 9, 2020November 10, 2020
  • Part 1: The Field of Play

Diversification is inadequate as a risk management technique and too primitive for the new environment of volatility and uncertainty.

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Do quants with algorithms have an advantage over other investors?

  • by Rodney Smith
  • Posted on August 2, 2020November 21, 2021
  • Part 3: Thoughts for the Individual Investor

Math and algorithms will give precise answers. And therein lies the problem.

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Many investors just don’t understand the risk/reward trade-off

  • by Rodney Smith
  • Posted on May 10, 2020May 10, 2020
  • Part 1: The Field of Play

Take the probability of loss times the amount of possible loss from the probability of gain times the amount of possible gain.

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The conventional view of market efficiency is badly mistaken

  • by Rodney Smith
  • Posted on March 2, 2020January 15, 2021
  • Part 1: The Field of Play

Prices in the stock market are never a reliable guide to the fair value of a stock.

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Acting with imperfect information

  • by Rodney Smith
  • Posted on September 19, 2019November 18, 2019
  • Part 3: Thoughts for the Individual Investor

It is all very good to recommend caution, but decisions must be made. In truth, many policies must be established and decisions made with imperfect understanding of the facts and of the risks.

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