I was reading the winning habits of warren and soros. Rather disappoint, but it sets me thinking.
Do note that I do not question the wisdom of these legendary great, I question my own understanding of them. So here goes:
Circle of competence.
How long have u been seriously investing? Few years? A decade? Do u have a circle of competence to start with? I know I don't, I am still experimenting and learning. I have tried recovery plays concept, dividend play concept, value-investing concept. I am no master in any of them, so should I stick to any defined circle? I think not. Staying in that circle, will cause me running in a circle, not circle of competence. But I do know my circle of incompetence. 1) Penny trading. 2) trading in gnerally. 3) TA 4) investing based solely on numbers and ratios
Be greedy while others are fearful.
Well, u have to be very careful when applying the above. U could be catching falling knife and be stupid when others are fearful. I thought I am greedy when others are fearful of s-chips, I am actually stupid. Thanks goodness, the heavy loss of s chips are offset by decent win too. I never brush off schip. I was vested inYZJ till recently, I wil buy back if the price is right. Just have to know that we are dealing with s-chip, even alpha s- chip with solid dividend records must be seen differently from others.
The most dangerous words are "this time is different".
Someone just slap me with these 4 words when I posted in a forum about Venture. I replied another forummer who is skeptical about its recovery, I explained my thoughts and another forummer slap me with this famous quote without explaining the details why is it not different. Hmm... If it always not different, then what is there to invest?
Diversification vs concentration
Many legends "hood" big big in several concentrated plays and scorn at diversification. Buffet, Soros etc. u have to ask yourself if u have a circle of competence to start with before u try concentration strategy. In the boxing ring of Mr Market, some of these legends know how to wait for a knock out blow. I am happy to survive and learn to take snipe at him first. If I "hood" big time and I missed my footing, and think the knockout punch will be on my face instead!
Never follow others blindly.
The key word is blindly, not never follow others. If u do your research blindly, follow your own gut feel, u will not be any better off. Do your due diligence, but if u know someone has done his due diligence, and u did yours but checking on his work, because he has a more robust framework of analysis, why the problem of following smartly? Our ego should not stand in our way, if we recognize someone superior, just dun follow blindly, and check your own ammo level and risk appetite to decide to follow or not.
To rephrase Graham words, since I cannot remember his actual words. U are right not because many agree that u are right, u are right because of facts and research. My take: I am only partially right when I exited with profits. I am totally right only when I made net gains beating inflation or whatever targets u have,nice CAGR for years to my coffin or senile. Yes, u can only be totally right when u stop investing totally, most likely because death do us apart. LOL