The last thing anyone wants to happen when investing in a new position is to experience a large loss. To prevent this, I follow two pieces of advice borrowed from trend followers. 1. Start with a small position 2. Then average up into the position if the price action of
Concentrate! Is It like 2000? Yes, the S&P 500 in 2000 and 2024 have very similar concentration levels but quality companies dominate the 2024 market whereas average businesses dominated the 2000 market. Based on an assessment of the level and stability of profitability, alongside balance sheet strength, 2000’
Few names in American business history carry as much weight as General Electric. Founded by Thomas Edison in 1892, GE has long been synonymous with industrial innovation and engineering excellence. From light bulbs and home appliances to jet engines and healthcare technology, GE has touched nearly every aspect of modern
With all else being equal, which scenario would you choose? A. Live in a town where the median salary is $50,000 but you make $100,000 per year. or B. Live in a town where you make $200,000 per year but the median salary is $300,000. It
How Starbucks Devalued Its Own Brand Starbucks is losing its soul! Declining sales, vanishing comfy chairs, and shifting towards efficiency over experience erode its brand. Can a return to its roots and a focus on authentic, in-person experiences save it? Buyback Barometer The winners and losers of S&P
The Roar is Getting a Little Louder UBS with a piece on why they expect 5-6% nominal GDP growth for the next few years. Driven mostly by a CAPEX boom from years of underinvestment and the productivity potential of AI. * and an accompanying podcast interview Why Capital Allocation Matters for
A Masterclass with Bill Miller Bill Miller on avoiding value traps, understanding the difference between frequency and magnitude in investments, the importance of understanding psychology, the role of benchmarks, and the critical nature of how a company allocates capital. Financial Statement Analysis with Large Language Models Can you train an
Even though quality companies trade at premium multiples, they still generate higher returns with less risk than the market. Why? Because of two major reasons. One behavioral and one fundamental. Behavioral The paper The Excess Returns of “Quality” Stocks: A Behavioral Anomaly suggests the disconnect between quality’s valuation and
Starbucks’ Slow Demise China is Starbucks’ biggest growth opportunity and its biggest source of risk. Starbucks’ strategy has always been premium coffee, at premium prices, served at premium locations. But has Starbucks’ current management misread the Chinese consumer allowing more aggressive competitors to win market share by offering better convenience
In 1998 Stephanie Crowe was murdered in her home. She was 12 years old. The murder stands out to me because of her age, it happened in the town next to mine, it was gruesome, and her 14-year-old brother Michael and his two friends were arrested for her murder. On
How to Maximize Your Long-Term Rewards.
Active Value Investing: Avoiding Value Traps Avoiding value traps provides a boost to long-term returns. Applying quality and momentum filters helps investors avoid the dreaded value trap. Terry Smith: why I stuck with Meta and what I think of the company now A 5-minute video on why Terry Smith and