The Investment Masters Class is based on the wisdom of the world’s greatest investors. Over the last few decades following investors with strong track records of compounding capital I’ve found that many common threads consistently surface. These common threads encompass a broad range of areas such as investor’s goals, processes, opportunities, obstacles, psychological construct, outlook and market views. Many are timeless. Below are 100 common threads of the Investment Masters which form the foundation of the Investment Masters Class tutorials.
- The Number One Rule is don’t lose money
- Harnessing the power of compounding is the key to investment success
- It’s better to be street smart than book smart when it comes to the market
- Investing is an art, study the Masters
- There are no get quick rich schemes, NIL, ZILCH Continue Reading →
When it comes to gauging the worthiness of an investment, investors often land way off the mark. Most treat short-term returns as a yardstick, while others have unrealistic expectations. Yet others misinterpret returns completely. However, correct assessment of performance is a must to avoid bad investment decisions.
For most investors, point-to-point return figures serve as the performance yardstick. This can be misleading. The current return profile of equity funds, for instance, is a case in point. The three-year returns of most equity funds comfortably outshine the five-year figures (see chart). Large-cap funds have clocked 13.5% CAGR over the past five years compared to 17.8% over the past three. Mid-cap equity funds have yielded 20.6% CAGR over the past five years against a whopping 34% in three years. To the lay investor, this sharp disparity in returns poses a dilemma—if the return is so much higher for a three-year period, does it make sense to stay invested for five years or more? But the investor is overlooking two critical elements here. First, he is considering a singular point-to-point reference from the past to make an assumption about the future. Second, he is ignoring the difference between annualised returns and simple absolute returns.
The original article is written by Steve Burns and is available here.
As a trader, your #1 goal is to keep your current trading capital safe and secure. Your goal as a a trader is to make money and not lose money. Many new traders lose their trading capital in the first year, but these ten tips will help you keep your capital intact so you can make it grow.
- Do not start trading until you have fully educated yourself. Trading tuition is expensive when you trade first and learn later.
- Do not trade an account so small that commissions will end up being a big drag on your returns.
- Do not trade until you have a well developed trading plan.
- Trade a position size that does not cause your emotions to become so loud you can’t hear your trading plan.
- Only trade in markets you fully understand.
- Only take valid entry signals and do not chase. Let your entry point trigger first.
- Only trade in liquid markets so bid/ask spreads do not devour your account.
- Never risk losing more than 1% of your total trading capital on any one trade through proper position sizing, and by placing stop losses at the correct price levels.
- Never expose your total trading account to more than a 3% loss of total trading capital at any one time, on one day.
- Never move a stop loss. Take the exit the first time it is triggered.
The original article appears on valuewalk.com and is available here.
Over the years reading plenty of books on investing and studying many of the world’s greatest investors I’ve come to recognise how truly insightful the combination of Warren Buffett and Charlie Munger really are.
While Warren Buffett cites the book “The Intelligent Investor” as “by far the best book on investing ever written” his style evolved over the years in a large part influenced by Charlie Munger.
“Charlie shoved me in the direction of not just buying bargains, as Ben Graham had taught me. This was the real impact Charlie had on me. It took a powerful force to move me on from Graham’s limiting views. It was the power of Charlie’s mind. He expanded my horizons” Warren Buffett
The original article is written by Steve of Trading Method, Trading Plan and can be found here.
Most new traders think their win rate is the most important math in their trading. It is not, your risk / reward ratio will determine your profitability more than a win rate.
Benchmark indices lost ground in late trades to end lower as investors booked profits after gains in the previous session post the US Federal Reserve’s decision to keep interest rates unchanged.
The S&P BSE Sensex slipped 105 points to close at 28,668 and the Nifty50 settled 36 points lower at 8,832. Among broader markets, BSE Midcap and Smallcap indices ended up 0.1%-0.3% each. Market breadth ended weak with 1496 losers and 1166 gainers on the BSE.
Foreign institutional investors were net buyers in equities worth Rs 337 crore on Thursday, as per provisional stock exchange data.
Uncertainty remains, but Florida is in the cross hairs.
What to expect today after tornado outbreak.
Why we’re watching Gaston closely now.
These headlines were pulled from a few articles today at weather.com. You could seamlessly replace Florida, tornado, and Gaston with a stock because like the weather, markets are highly complex with countless variables that can’t fully be modeled.
In his highly entertaining book, But What If We’re Wrong, Chuck Klosterman talks about how much money has been spent trying to predict the weather: