Investing - What Works?

Archive for the ‘Strategy’ Category

Contrarian Investment

by Laurence Watchman
September 22nd, 2009

John Maynard Keynes was one of the world’s most successful investors. He said, “When you find any one agreeing with you, change your mind. When I can persuade the Board of my Insurance Company to buy a share, that, I am learning from experience, is the right moment for selling it.”

Luck vs Skill in Investing

by Laurence Watchman
June 10th, 2009

It’s easy to make money investing during a boom. You don’t need skill. You just need to know the market’s rising. You then need to borrow $50 for every dollar you’ve actually got, and put the whole lot in an index fund. A couple of years later, the market’s risen 30% and for every $100 invested, you’ve got $1,500. No special investment skills required whatsoever.

Loss of Opportunity is Preferable to Loss of Capital

by Rich Hamilton
March 16th, 2009

If you accumulate some capital, the most important thing you can do is not lose it. A trader who wants to survive and prosper must control his losses. You do that by risking only a tiny fraction of your equity on any single trade.

Selling Stocks – The right time to sell stocks

by Rich Hamilton
June 19th, 2008

There is an old saying that says, “any fool can fly, but it takes an expert to land”. Applied to stocks, we say, “any fool can buy but it takes an expert to sell”. Of course, I mean sell profitably. Any fool can get lucky but if you aim to make profits consistently in the stock market, you’ve got to be an expert at selling.

Stock Market Timing

by Rich Hamilton
January 17th, 2008

Card counters are feared in casinos. They represent a rare breed – gamblers who can beat the dealer. Unsurprisingly, casinos – hungry to part the foolish from their funds – have banned card counting. How can you grab the card counter’s advantage in the stock market?

Fundamental Analysis of Stocks

by Laurence Watchman
June 18th, 2007

It’s fair to say that pure fundamental analysis can make life unnecessarily hard for most investors. Stockbrokers employ large numbers of economics and accounting graduates to carry out fundamental analysis and stock valuation. Although many authors like to propagate the myth that you can easily beat such analysts, the reality – measured by the success of small investors in the stock market – is that most small investors invest rather poorly.

Investment Trading

by Rich Hamilton
March 20th, 2007

An investment is bought for the long term – to fund retirement for example. Investors are more like car-collectors than dealers. They learn as much as they can about what they’re going to buy and would love to hold their purchases for the long-term.

Trend Following – Profits from Sticking with a Trend

by Rich Hamilton
August 18th, 2006

We have cited the NASDAQ’s behavior as an example of stock market prices rising unrealistically high. Individual stocks behave every bit as irrationally as the NASDAQ did. Waves of market optimism carry prices higher than fundamentals should allow them to go. Prudent traders stick with these high-flying stocks, however, until the trend is over. This is how they maximize their profits.

Trading Investing

by Rich Hamilton
August 7th, 2006

It’s possible to combine fundamental and technical techniques in stock trading. One way of doing this is by using PEND to identify stocks with particularly attractive fundamentals and TREND to ensure you buy stocks the market also believes is going places.

Safe Stocks

by Rich Hamilton
July 18th, 2006

In looking for market verification, we’re doing something rather similar to Buffett. One of the rules Buffett sets before he buys a stock is “increasing market value”. This rule requires that for every dollar per share a company has reinvested in itself, the share price should have increased by at least one dollar too.

Microcap Stocks – An Intelligent Investment?

by Rich Hamilton
February 11th, 2006

Microcap stocks rate few mentions from fund managers or market commentators. Yet historical evidence suggests that investing in microcap stocks (very small companies with a market value of $25 million or less) is particularly fruitful for small investors.

Origins of the PEND Investment Method

by Laurence Watchman
June 30th, 2005

Garrison used the method to screen all available stocks. Stocks that made it through the screen would then be researched more thoroughly using traditional fundamental analysis methods. Garrison commented, “The hard work begins after you have done the screen”