Category — Investing Strategy

I have 1 stalwart, 3 fast growers, 3 turnarounds and 1 cyclical.
For those that have read One Up On Wall Street by Peter Lynch, you’ll know that I’m referring to the 6 categories that he assigns to the companies in his portfolio. As I was reading this section, I had never thought about classifying my positions in terms of growth and return potential. I always looked at the different industries that made up my portfolio and it was refreshing for me to see it another way.

Good ideas are hard to come by. There are dry spells as well as an occasional monsoon of ideas. But how does one maintain a steady influx of ideas and knowledge?

The merger between Aquila and Great Plains has finally been approved. The deal was first announced in February of 2007 and the deal is now expected to close on July 14. It was a long process but certainly worth the investment.

As the title suggests, beware of how you use the spreadsheets. Like a pen, a finance spreadsheet can be used to create wonderful ideas and opportunities or it could just as easily ruin you and leave your mouth gaping open with a crap taste in your mouth. I’ve noticed a lot of people downloading the files and although I have a disclaimer tab in there, I would like to expand on some things.

I first came across the term while reading Dhando Investor. A really really basic definition is the idea of taking advantage of the price difference between an investment. e.g. if gold is selling for US$980 on the Australian market and being sold for $1010 in the US market, an arbitrageur would purchase gold from the Australian market and sell it immediately on the US market with close to zero risk. We will look at how it relates to stocks.

Previously I had written about a list of Don’ts that was listed in Common Stocks and Uncommon Profits. I said that I would do a book review, but because there is a ton of timeless quotes and information, I will leave it up to you to read it on your own to appreciate its full goodness.

As I continue reading one of the greatest investing books, Philip Fisher’s Common Stocks and Uncommon Profits, I thought I’d share some “Dont’s” in the book before I do a book review later on.<

Do you consider your exit strategy prior to buying a company? The exit strategy is just as important as the entry strategy. The entry strategy is something everyone considers, but when do you sell? Do you hold forever like Buffett? For the average investor, holding forever isn’t very practical.

Do you diversify? Diversification must be one of money managements most important concept. When you speak to just a regular financial advisor they will probably mention that you haven’t diversified enough. Have you diversified lately?

Doesn’t sound right does it? And it’s not what Wall Street tells you either. If Wall Street is conventional, the Old School way is anything but conventional. High risk is considered to produce high returns. You are subject to those unpredictable variables which give you the “lose it” or “win it big” factor.