Trending
Nobody Knows Nothing! In modern markets, today's trash may be next month's treasure.
In my ongoing presence in the Seeking Alpha community, I am actively engaged in a friendly debate with some self-directed investors. I suspect most of them have been investing their own money for a while. And as I remind them regularly, this phase of my career is primarily about passing on both what I’ve learned from investing professionally since the 1990s, and communicating in real time what I see, think and do with my own money now.
A lot of that experience relates to my main investment tenets, my number 1 rule if you will: AVOID BIG LOSS. Everyone defines “big” differently. But in concept, “ABL” as I refer to it is really about not assuming that what happened in the past will simply repeat itself in the future.
I am somewhat astonished by how much resistance I get from investors when I try to explain and even show them that past is not only not prologue, it is very often the opposite. But as I say often in that forum, I just write my views. I don’t expect anyone else to adopt them.
Don’t be afraid to be a contrarian. As Rob Arnott, one of my favorite investors (and the proof I’ll never be the best investor named Rob) said, "In investing, what is comfortable is rarely profitable."
So, here are some recent examples of where simply scouting what’s down, what I can convince myself is decent fundamental value, and of course has an encouraging chart pattern, can work much more often than not.
This ETF, led by some of the biggest Chinese stocks, was considered off limits, un-investable, early this year. But that chart didn’t lie, and didn’t care what “everyone” thought.
Utilities (XLU)? Who wants those boring old things? Contrarians, that’s who!
These are just 2 examples. My YARP stock portfolio is filled with them, all in different stages of their progressions from ignored to suddenly relevant. Nothing is fool proof in investing, but having a basic process that you can understand and execute consistently allows an investor to ignore the crowd, the noise, the TV pundits and make high-percentage decisions with their hard-earning wealth.