Thread by @RamBhupatiraju

"Not Learning From Investing History Can Be Hazardous To Your Wealth" - Excellent article by Gary Mishuris.

Portfolios & Markets being at ATHs is great, but it's also a time to reflect, practice caution, performing quality control & some risk management.

behavioralvalueinvestor.com/blog/2018/10/3…

Article goes thru the backdrop and lessons from

The 1920s and the Great Depression

The 1960s and the “Nifty Fifty”

The 1990s and the Tech Bubble

The Housing Bubble and the Great Recession

The Current Investing Landscape (article from Oct 2018, further elevated now)

Some good quotes

"Investment theses were formulated that described only the quality of the business and its growth prospects, but made no mention of the price and why it offered an attractive return."

"Thinking from first principles rather than following conventional wisdom is one of the things that the best investors do that the rest don't."

"Again stock prices became secondary and all focus shifted to the growth potential of the businesses of this new age"

"Investors again learned that purchase price matters and that simply buying well-known good companies is not necessarily a path to superior investment results."

"Those investors who resisted and insisted on old-fashioned metrics based on profits and cash flows were labeled as dinosaurs who were too set in their old ways to be able to “get it” in this new environment."

"The big underlying assumption – that house prices could not decline at the national level – was the mantra on which the whole house of cards was built. But what is true at one price is no longer true at another. "

"Investors were yet again reminded that the purchase price of an investment always matters, no matter how attractive the underlying business or asset."

"Few legitimate bargains can be found in the stock market that combine both sufficient business quality and a margin of safety in the form a price that is at a meaningful discount to the intrinsic value of the underlying business".

Few of my comments on this topic.

Factors like Fed actions/Low interest rates/Liquidity/poor prospects in other assets etc could sometimes take Stock valuations far from what their reasonable values (based on Business quality/predictability, future cash flows) should be.

I like my growth Co's as much as anyone else, but buying growth at any cost could turn out to be a big problem when the sentiment and valuation tides turn, if you just buy and hope.

For long term focused investors in the highest quality businesses, buying them over time upon thesis execution, and with a strong stomach for volatility, and some risk management measures, it could turn out to be OK.

Being attracted to the Market because of recent returns, buying upon hype (& not doing due diligence), buying all at once (or within a short time frame), w/o enough focus on quality/durability & w/o respect for valuations could turn out be to bad.

My 2 cents, not advice.🙂

/END