Read? Investing Made Simple by Uncle8888 (34)
Read? An Ideal Permanent Portfolio???
What is important to long-term investors?
- Don't lose your investing capital.
- Adequate cash flow from portfolio over market cycles
Introducing Barbell portfolio management strategy
War Chest, Battle Plan, and Fortress.
War Chest: Your fire-power. Size really matters!
This is the right time to slowly re-build your war chest by selling into strength.
Fortress: Provide adequate cash flow to survive inside the fortress against strong enemies outside.
This is the right time to slowly build or re-build your fortress by buying into weakness.
Battle Plan:
Be patient
The length of the Bar is your patience of not doing anything in between the Bull and the Bear.
How long is this bar?
Don't Lose Your Investing Capital
When we are wrong, at most 100% loss; but when we are right; we can win XX%, XXX% or X,XXX% over long run.
We can't probably pick all winning stocks and not even the former record-holding fund manager like Legg Mason's Bill Miller who blew up all his accumulated gains by averaging down infamous losers like Enron, Freddie Mac, Worldcom, Wachovia, Bear Stearns, and AIG.
Manage risk: Don't average down. At most 10% of your investing capital in one stock or 20% in one sector.
Hunt for Dividend Growth stocks
Dividend is real; but growth with dividend is even better
Understand their wise words
"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." ~ George Soros
In the famous book entitled Reminiscences of a Stock Operator, Jessie Livermore said: “After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!
It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level, which should show the greatest profit.
And their experience invariably matched mine -- that is, they made no real money out of it.
I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.”
Men who can both be right and sit tight are uncommon.
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"Men who can both be right and sit tight are uncommon".
ReplyDeleteTo be right is already very difficult.
To be right and sit tight is double, no immensely difficult. Unless after buying you "happen" to forget to look at your buyings for 20 or 30 years
The look of even a double bagger is too much for you to bear. You most probably will be salivating to take profit. At the same time you have Fear gawking at you day and night. The Fear of losing all your profit and then some is real. So don't look if you can.
So buy and forget (don't look) is one way. Definitely not only in stock but FH land and properties. In properties you can not forget as you have to collect rent.And you can't escape to learn how to deal with tenant's problem from time to time.
So which is better for very long-term investment. i suppose logically you should know.
Shalom.
Do property investors check their price on daily basis? No right?
DeleteFor stocks, to be right and sit tight is not about difficulty as in typical investor. Is about your wealth and personal constraints.
ReplyDelete