As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

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Value Investing
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Saturday, 28 October 2017

How much do we really know about our investments?

Read? How much do we really know about our investments?

A natural progression of this logic was to look at my own investments and potential investments and realizing how little I know about them. A mid-level manager at any company I own almost certainly knows more about the company and industry landscape than I ever will. That’s because I can never replicate working in the business and industry every single day.

One of the biggest things that is almost impossible for an investor to know is a CEO’s inner motivation—yet it’s one of the most important. Reading The CEO Pay Machine earlier this year really drove home how bad virtually all compensation packages are. First, a CEO gets paid a high salary no matter how well the business and stock performs. On top of that, they are gifted stock options that have a ton of upside and no downside. Because of this, it’s damn near impossible for a CEO to be truly aligned with public shareholders. Knowing that, most investors spend time trying to triangulate what the CEO’s motivations are and how shareholder friendly they are, but at the end of the day it’s just a guess. Thomas Peterffy at Interactive Brokers has a long history of being shareholder friendly, focusing on the long-term, etc, but that doesn’t guarantee anything about the future. There are plenty of examples (Bernie Madoff, Tom Petters) of people who were highly respected for many years until they turned out to be frauds.

All of the above is why I’ve actively tried to stop using words like “always” and “never.” Talking in absolutes in a world that is grey is rarely correct. I’ve also tried to be more careful when I’m talking about a company’s future. Though I’m certainly guilty of it, it’s an exercise in intellectual dishonesty to say a company will accomplish something next year, as opposed to saying they should or hopefully will accomplish that same thing.

Read? Less Analyzing. More Investing - CW8888

Less Analyzing. More Investing - CW8888

May be after reading the above article; you may have some clues into why Uncle8888 thinks like that arh!

1 comment:

  1. Is it very closed to why U want B & H if U really don't know what really going to happen next?

    "See Good, Collect Then"

    Real example of B & H:-

    BAC 124 shares since 2006 on DRIP, still lose money until today because mainly of 2008/2009 fiasco.

    HP - 73 shares on drip since 1995 or slightly later, despite of so many fiascos, making money leh.

    So how are sure are U going to B & S & B & S &.... to make money?


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