Our Desired Investing Outcome: The Pareto Principle (80/20)

Read? The Pareto Principle (80/20) Investing Strategy


Uncle8888 wrote this in ..

Sunday, 2 September 2012

Investors. Know at least Pareto's Principle

Pareto Principle ~ “20% of the effort generates 80% of the results.”

Market Timing vs. Time in Market???
Fundamental vs. Technical Analysis?
Short-term Trading vs.  Long-term Investing???

For long-term investors, we should be observing Pareto's Principle.

80% patiently waiting for Market Timing and then spend 80% Time in Market with 20% of our effort will generate 80% of the results.

And then we spend another 80% market timing for next cycle.

Read?  Laws Applicable To Investing

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Quoting the wisdom from this man, Rolf SueyMarch 20, 2015 at 9:48 AM

@Investment

this principle applies, but it is an outcome. It cannot be use as a strategy.

Since every investment before u press the buy button is ur top priority. If u have 5 stocks, u cannot say my priority is only 1 or 2 out of the rest.

I guess that maybe what B is trying to say is now he is only focusing on few stocks only with higher amt vested in each stock. And this is good enough for him getting good rtn.

but if 20/80 strategy applies... then out of ur 10 stocks, only 2 will give u good money. then how sure are u that it will comes from ur top holdings?

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Uncle8888 fully agreed. It is an outcome and NOT a strategy.

BUT, this should be our desired investment outcome after XX years of investing in the stock market. We should be proving this principle RIGHT!


How?




Uncle88888 is quite sure that we are going to prove this principle WRONG by selling our winners sooner; but holding on our losers for the longest possible time before we are forced to sell.


Our investing strategy will likely to determine our investment performance outcome after X decades in the stock market. When our strategies are NOT rightly executed; they will NOT lead us to our desired outcome - The Pareto Principle ~ “20% of the effort generates 80% of the results.”