Benj Gallander is president of Control the Heard. His talk was entitled "Playing with Probability". His web site is called Contra the Heard. Probability is about the chance that something will happen.
He wants stocks that have been around at least 10 years. He wants historical data. Most IPOs are down a year later. People price a stock so that they can get the best price. He likes using technical analysis, fundamental analysis and talking to management.
Benj Gallander said that life can only be understood backwards, but can only be lived forward. Also an example of 1 is not enough to go on. Mark Twain said that there are two times not to speculate. When one can afford to and when one cannot afford to. If you have no discipline, you have no method. You should never make a trade in haste, as you will not do well.
We are all animals and we have the tendency to act in the same way over time. We were the same in 1970 and will be in 100 years. We do not change over time. People tend to invest when things are going well. A contrarian would invest when things are not going well. Do not invest when markets are hot. To do well you have to invest when things are bad.
It is normal today to have a cell phone and the internet. We have a lot more information. Are we better off? The answer is yes.
Benj Gallander says that he always sets a sell target when he is buying and it is usually twice the current price. He is not married to the target, but is pretty much unless fundamentals change. He does technical analysis, but also looks at the defensive side of a stock. That is he looks at debt levels. If investing in mutual funds, the lower the fee the better the results, usually.
With Contra the Heard newsletter, they send out an email when they buy and sell in their portfolio. You can invest on your own, this is not surgery and it is easy. However, you should read a lot of books and magazines, like MoneySaver. The more you practice investing, the better you will get.
He gave a quote of "ignorance gives people a lot of possibilities".
Dollar cost averaging lowers your returns and does not work. The key is to look for bargains in November and December. You do so because of tax loss selling occurring then. Next you have the Santa Claus rally and then the January effect. Some stocks have different times to buy and sell over the year. Use these as probabilities.
In 2008 was the last time the Contra the Heard lost money and their fund was down 36%. You will lose sometime in the market. It is important to look at the debt level of a company. You should look at debt relative to revenue. He likes companies with stable or lowering debt.
Another quote is "fate laughs at probabilities". However probabilities are crucial to this game. You should never buy on margin. This can be a big problem if the market goes against you. You should pay down your debt.
Commodities are currently out of favour. It is hard to find good companies with low debt. The US has financial crisis every 10 years. Capitalization ratios of banks are important. Should we look for another black swan event? Yes, because they always happen.
Some countries are doing better and some are not. Companies are doing way better than countries. GIC are a part of a balanced portfolio. Have money on the sideline. Reduce your risk. Beside debt, use no margin.
You should buy successful companies. There are companies that have been successful in the past and have been around for a long time. This is no guarantee, but it is a good sign.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
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