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Charles Ellis had the idea of the "losers game"
Professional tennis is a "winners game" i.e. you win by hitting winning shots
Amateur tennis is a "loser's game" i.e. you win by not making mistakes.
Investing is a loser's game.
Avoiding making stupid mistakes is key
Charles Ellis had the idea of the "losers game"
Professional tennis is a "winners game" i.e. you win by hitting winning shots
Amateur tennis is a "loser's game" i.e. you win by not making mistakes.
Investing is a loser's game.
Avoiding making stupid mistakes is key
The 1st rule is to avoid anything that prevents you staying at the table
Always be long time & avoid margin
Rick Guerin was Buffet and Mungers equal in intelligence yet he wanted to get rich quicker & used margin
He got margin called in 73 & sold all $BRK to Buffet at bottom
Always be long time & avoid margin
Rick Guerin was Buffet and Mungers equal in intelligence yet he wanted to get rich quicker & used margin
He got margin called in 73 & sold all $BRK to Buffet at bottom
2nd rule: Is to make sure the company can stay at the table.
Cashflow?
Cash levels?
Debt levels?
When are debts maturing?
Will they be able to roll at the same terms?
Historic rate of dilution if small miner?
Read the 10Q and 10K do the work!
Cashflow?
Cash levels?
Debt levels?
When are debts maturing?
Will they be able to roll at the same terms?
Historic rate of dilution if small miner?
Read the 10Q and 10K do the work!
3rd rule: Understand the incentives.
Are management incentives aligned with shareholders?
Review executive compensation
Who owns the stock and how much?
Review G & A costs. Same as peers or is it a lifestyle company?
Make sure the money is going to the right places.
Are management incentives aligned with shareholders?
Review executive compensation
Who owns the stock and how much?
Review G & A costs. Same as peers or is it a lifestyle company?
Make sure the money is going to the right places.
4th rule: Execution is key
Results or excuses?
History of executing plans or "pivoting"?
The only project some CEO's will ever execute on is getting themselves a yacht.
Results or excuses?
History of executing plans or "pivoting"?
The only project some CEO's will ever execute on is getting themselves a yacht.
5th rule: Price action matters
No matter how airtight the thesis it needs to be confirmed by price action.
If price is breaking down put the thesis on the shelf and keep an eye on it.
"The right thing at the wrong time is the wrong thing" -Joshua Harris
No matter how airtight the thesis it needs to be confirmed by price action.
If price is breaking down put the thesis on the shelf and keep an eye on it.
"The right thing at the wrong time is the wrong thing" -Joshua Harris
6th rule: Conviction is everything
Do the work.
Great investments are uncomfortable to buy.
Be prepared to look stupid for periods.
"Volatility is the price you pay for returns" - Bill Miller
And without conviction, you can't stomach much volatility
Do the work.
Great investments are uncomfortable to buy.
Be prepared to look stupid for periods.
"Volatility is the price you pay for returns" - Bill Miller
And without conviction, you can't stomach much volatility
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