An early morning smile after reading this by one of those investment gurus teaching retail investors in blogosphere.
How many retail investors think that they have the investing capital to accumulate up to 35 stocks in their portfolio and STILL think they are not diversified?
Quote : "Teng, one of Singapore’s most successful boutique fund managers, is famous for “putting all his eggs into one basket”.
During his tenure at Target Asset Management, he only invested in 35 stocks."
Teaching method and executing method are two different skills - CW8888
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all in or all out. the lack of conviction subjects you to the emotional wiggles of the market.
ReplyDeletewhipsaw = wasted profit and unncecessary loss.
Who is Mr Teng /Target Asset Management?
ReplyDeleteIn 2010, he returned more than $2 billion to his investors and told them he was taking a break.
http://ifonlysingaporeans.blogspot.sg/2012/05/aid-for-silent-needy.html
CW,
ReplyDeleteIt can be tough to run a business with too many cooks...
Especially if one partner promotes permanent portfolio - by essence don't put all eggs into one basket...
Then another partner says lets go full conviction mode and put all eggs in one basket...
They are good people. Maybe they lack a marketing guy in their midst.
It has to do with branding.
The power of brands has to do with consistency of message so consumers can relate to it immediately.
But if we muddle the message with today sell spears, tomorrow sell shields...
A simple test is to ask consumers what's the first thing they think of if they see our brand. If customer says permanent portfolio, then anything that distracts from this mind share is just a distraction...
If I want to give lessons on different styles of investing, I would create different sub-brands - like Dairy Farm has done with Cold Storage, Giant, 7-elevan. Same distribution network; different sales messages to different consumer segments.
We can't use one Dairy Farm brand to attract the "attas", the budget conscious, and the convenience seekers all at the same time... This is not Lord of the Rings...
from: http://awealthofcommonsense.com/2016/07/misconceptions-about-diversification/
ReplyDeleteTrue diversification is about:
Protecting you from terrible results over long time horizons (the only ones that should matter).
Spreading your risks.
Ensuring you can survive severe market disruptions and still be able to achieve your longer-term goals.
Planning for a wide range of outcomes.
Managing your investments without knowing how the future will play out.
Reducing the probability of a large loss, but not completely eliminating risk altogether.
Not going broke.
Giving up on home runs to avoid striking out.
for me, personally, it is about ensuring that given you are right about the general expectancy of a direction, not enough bad eggs in the omelette to spoil the taste nor send u to the hospital.
ReplyDelete