There are times in any investor's trades, sells & purchases for a valuations assessment. A marked pause to survey the landscape, sharpen the saw and box the compass. There are so many opportunities on the market these days - good companies and reasonable valuations. Making the right decisions at such times means making no movements, but taking account of one's portfolio - it's balance, make up, sectors and markets.
Without waxing too philosophical or poetic, learning to ask questions helps build discipline. Instead or asking which stock to buy now? An exercise we'll refer to as "The Mirror Test" is to ask, Who's going to be successful in the next 18 months. Often we look for key holdings to go 3 years or longer but valuations can dynamically change in a company over the course of 18 months. The markets are moving faster theses days, but to take advantage of large market trends it is better to see the landscape from the looking glass than the microscope. Save the science for balance sheet forensics!
From a valuation stand point a better question for one to ask is, What is the (known) worst that could happen to this stock? (insert company here) Then, What effect to this portfolio will that produce?
No one can "know the unknown" market psychics and ball gazers are the antics of charlatans and the undisciplined. Successful market investments that produce stable long term gains requires the discipline to think, evaluate and calculate risk and valuations using known quantiles available at the time.
Regards.
Ps. This clip for your amusement is to remind you to laugh, think outside the box and see the "bigger picture". Enjoy!
Without waxing too philosophical or poetic, learning to ask questions helps build discipline. Instead or asking which stock to buy now? An exercise we'll refer to as "The Mirror Test" is to ask, Who's going to be successful in the next 18 months. Often we look for key holdings to go 3 years or longer but valuations can dynamically change in a company over the course of 18 months. The markets are moving faster theses days, but to take advantage of large market trends it is better to see the landscape from the looking glass than the microscope. Save the science for balance sheet forensics!
From a valuation stand point a better question for one to ask is, What is the (known) worst that could happen to this stock? (insert company here) Then, What effect to this portfolio will that produce?
No one can "know the unknown" market psychics and ball gazers are the antics of charlatans and the undisciplined. Successful market investments that produce stable long term gains requires the discipline to think, evaluate and calculate risk and valuations using known quantiles available at the time.
Regards.
Ps. This clip for your amusement is to remind you to laugh, think outside the box and see the "bigger picture". Enjoy!
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