Lmao!
please tell us about how rich you are from all your simple stock picking success
Aye! I want to know too.
If Taleb is talking about randomness in our daily lives, and i am going by the review in amazon, he is imo definitely wrong. Since there is no randomness in the stock market, i also don’t believe there is any randomness in our daily lives. Many things happen to us because they are bound to happen. We simply can not control those things. If we know, then we can prepare. Sound familiar? We know booms and busts recur. When we have a boom, what is inevitable? No matter what we do, what must occur? An inevitable bust. The key word is inevitable. Things happen to us because they are inevitable. But it doesn’t mean we can’t do anything about it. Ever wonder why some men peak and never peak again? Other men peak and continues to peak. What is so special about these men? I can see a lot of these similarities in the way stocks move as well.
Someday you’ll get it. Rather than lyao, why not enlighten a level 1 candidate why is it such a mystery in picking stocks? In your experience, why have you failed and others succeeded?
Yes, i am quite rich. I can not get poor. I can only get richer. As far as having deep pockets, no my pockets are not that deep. At this age, i don’t expect my pockets to be extremely deep. After a couple of years of learning and losing some money, i’d say i am doing ok. But i do wish my pockets were a lot deeper right now. LOL. In a man’s life time there are 2, at most 3 times of making big money. This is one of those times. But i think i’ll do ok.
Advice for you, try to seek knowledge first. Money will follow. Money seeks people with knowledge. Not the other way around. Once you have knowledge, you will develop that quiet confidence. People will know. And you wouldn’t have to be nervous going to interviews because you wouldn’t care if they’ll hire you or not.
^ Who is this kid?? Wow.
This is the recipe for CEO success…
Maybe some small time entrepreneurial success can be obtained by this insanity, but you’ve got decades of maturity before you can even think about leading anything in an established corporate.
Why have you succeeded with this simplicity, when the vast majority of professional asset managers cannot beat indices despite all the resources in the world to do so?
Why is the intangible approach wrong? if the market is perfectly efficient and one cannot gain any sort of insight from fundamental or technical analysis, all that leaves us with is subjectivity
No investment approach is either totally wrong or right as a permanent or only approach. Each may prove to be the best in specific context of who is the investor, purpose of investment (long term/short term) and what is the goal/target. That is one reaps the harvest while another goes bust.
I doubt there are many people here who believe the bolded.
^ Even if they did believe markets were efficient, picking stocks on solely on voodoo feel still would have no value.
It’s a legitimate approach. Looking at numbers can only tell you so much about the business. You learn alot about what will make a successful company by going out and experiencing and dealing with it. It’s very similar to the Balance Scorecard approach, which im sure many of you are familiar with
^ Disagree. All that really matters at the end of the day is cash flow. Obviously qualitative factors impact cash flow, and should be considered (a la Balanced Scorecard). That said if you visit five different fast food joints and invest based on which one was nicest by feel, you’re an idiot. (A) the sample size is too small to even be considered, (b) you’re likely to select one with a higher cost structure due to higher service quality and © you haven’t factored in the price you’re paying for cash flows. It may be a nice business, but paying 10x what its worth is stupid. Where as you can perhaps buy some slumlord REIT at 3/4 its value. Whatever, you get the point. Just investing on hype and feel might be promising during a bull run, but you’ll get absolutely demolished when the tide goes out.
I dont always select the one with the highest cost structure. i take into account the margins and the customers service experience. Ie my investment in southwest airlines. If you fly with them, you have to realize they make a killing. High turnover, expensive price relative to the apparent low expenses… older fixed assets. While others are pouring over the statement of cash flows and balance sheet, I am out perceiving and sensing great business models.
Same with my investment with chipotle. Going there and talking to college students and understanding just how much people like it makes it a no-brainer. When you see how many people go there, how passionate and prideful their fans are, the nice environment, quality management, clean-cut employees, expensive price that people have no problem paying, small CAPEX due to such small locations…
Knowing the cash flows arent going to help me any. The stock will just have a price that represents whatever pricing multiple analysts perpetuate is the right one for the industry.
The key is comparing my perception of the company to the P/E ratio in the relative industry. Ie burger king once traded at a higher multiple than chipotle. I knew this was insane because chipotle was clearly the superior business. I knew it was only a matter of time that chipotle would seriously grow
That’s fair to some degree. Southwest Airlines, by the way (and not unlike other airlines) is a horribly low margin business. They make about $5 per passenger. If you talk to a flight attendant, you pretty much cost more than the revenue you’re bringing in. Airlines are cutthroat.
Vandelay, you remind me of myself in my college days. Juss keep trying to learn and here are a few pointers.
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earnings are not very useful, it is never consistent (shiller tried to fix this by doign 10 year average, but i dont think it is usefull for a singular company), it is easily manipulated.
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Cash flow, especially now, is very important, since management typically increases their dividends or buybacks. Just try to make sure they arent trying to be an acquirer of a merger.
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Historically speaking, companies with increasing capex typically outperform, as companies have to be fiscally responsible and only spend when there is demand.
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The most important part in what you mentioned is when customers are willing to pay “an expensive price”. Premium products are important since they are one of the best signs of a competitive moat. Just make sure their moat is durable and long lasting. Phones for instance change rapidly, remember the razor, sidekick, blackberry, and most likely iphone now
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Multiple analysis is important. you are looking for SOTP through EV/Ebitda (ebitda is decent proxy for cash flow). Relative value investing is the only way to go. Historical value investing is okay. Juss try to never overpay for a company.
My best advice though once you screened a company for its metrics and you love it, listen to Q&A section of a conference call. Sometimes you can easily predict whether sell side research will bump their target price or do an upgrade based on this section alone. Of course it is only a good idea to do an action when the stock remains flat or goes down in value during the release of results. Alpha is a zerosum game. for someone to outperform someone has to underperform, and only the best outperform because they understand that price is everything.
BTW burger king is trading at a high multiple because their entire business is based on royalties. They changed the whole business model when some 3g guys took over the company and literally refranchised all their operating units during the past 2 years. CEO is 3g capital through and through. If they were company operated, they would have a lower multiple. Chipotle trades at a high PE because people see it as a trendy growth stock which will dive if growth ever slows. Having said that, chipotle is amazing.
How has nobody replied to this? This is gold.
…because it makes sense to draw controversial conclusions about the stock market and apply them to daily life. For example, stocks can be divided into three categories and so can daily life.
Checkmate athiests.
When I was little, I used to peak at my neighbor tanning in the back yard. Why, just today I peaked at a woman’s butt at the gym. I peaked early, I peak often and I will continue to peak for the rest of my life.
Thanks for the thoughts