What I have learned during investing for 10+ years
I have now invested for more than 10 years and it is suitable to reflect back on what I have learned during these years, remember to take this from a perspective of a stock picker as that is my investment strategy.
Dont listen on others you can't borrow conviction
Lack of focusing on the relevant in a case, 90% of investors focus too much time on white noise
Focus on process as outcome is diluted by randomness
Don't invest in companies that have been claimed to being a fraud by reputable sources. Lex wirecard.
It's more important to have right on the big picture than the exact number
Always invest with a thesis and follow it up continously
Don't connect the share price with the progression of the company
Always listen to the bear side of the case, but don't listen to general bear points
University studies in finance and other business admin subjects are not waste of time to become a investor, it is the people who waste the information in not applying it on the real world.
Effort is linear, profits are stochastic
In general does a stock picker only need to focus on 1-5 things in a case, 1-3 risks, and a ball park view of what the company should be worth (do what valuation method suits you), everything else is just unneccesary research for the investors own control need.
I asked Twitter what they wonder what I have learned during 10 years of investing.
Actually my goals are the same and have not changed at all, may not be as focused on them as I already feeling I live my dream. Around the saving ratio, it is just normal for the ratio to go down as going from student to full time worker is using that student cost base with full-time income than leveling up in life with bigger apartment and similiar. Pretty boring answer but nothing has changed since I made my goal, it was always in my plan to use my capital to buy an apartment and other stuff to have a high ROL (Return on Life).
I still use the same valuation models to "find" a fair value so that has not changed. But for finding a value case it has been bipolar with more complexity making it harder for others to understand the value and it should be easy to understand the value far surpass the market value with simple models.
I am using 2015 as my start for my CAGR as that was the start of the strategy I have at the moment, everything before was like a lost kid in the woods hahaha
This is a hard question, I usually say that time is the greatest asset because you can never earn back a lost hour but you can earn back a million if you lose it. What is late? you can create a pretty signifcant amount of fortune during a short time if you are ready to have a high saving ratio and average annual return. Saving 5000 sek per month with a return of 7% per year for 10 years is 840 000 sek, that is not a sum to look down on. With better return or saving your can amass substiantial more capital. You need to remember investing is a marathon and you need patience. Yes, you can see a few persons on social media create a fortune during a short time duration but remember they are paying by spending a lot of time behind screens and taking big risks. Everybody gets good if they spend hundreds of hours training themselves, it is the same with investing and trading.
I would have done as I have, as I focused on two things; learning for the long-term and build my skills so good that I could be a equity analyst (which I now is). Also I don't see how I would have got the recommendations i have learned during my investing journey. And yes, some things must be learnt by doing and can't be taught in theory. Investing is a mastery not a science.
Kinda the same question as before. With the same goal I have at the moment and the same economic situation but without any assets, I would do the same thing and have the same strategy as I have now.
Which M&A roll-up companies in my portfolio? I have none, I have mostly liquidated my portfolio to buy a new apartment. I kinda only had one in the portfolio, Embracer Group. I think the category has got a historic premium due to low cost of debt because of the interest situation we have. In a ten year perspective I think the valuation have more down side than upside and the valuation is pretty high for a company growing not astronimical and with low probability to have a margin expansion. But I have been wrong about these M&A roll-up companies before. The only one I have owned and been thinking of looking into more is Vitec(owned before got to expensive and cost more expansive) and Lifco (never did my home work on it).
Must be my father who has let me living in his apartment for free in Stockholm to be able to save as much as possible.
If I would know how to motivate others I would sell that and become a millionare. It's hard I don't succeed in this area with my relatives either... I think the only thing you can do is asking what are their dreams and what moneywise is in the way and show how fast capital grow with little time. It is a hard question as I have liked to save money from you age and found out pretty early by investing will the money grow faster than on a savings account.
See the beginning of these post ;)
I can only reflect on the twitter collective here, but it is probably a good sample size for the rest of the popluation of active investors.
For 10 years ago it was a lot more value oriented with long post about numbers and how the company was cheap compared to the cash flow they generated, not necessarly a DCF but a least quite a focus on the numbers. Then came the focus on dividend, as high dividend as possible. Very little focus on anything else than the dividend, a high dividend was a sign of a cheap company and it was generating high amounts of cash. After a while it become more focus on payout ratio to have a quality stamp on the quality of the dividend. After high dividend it became more focus on dividend growth and here started it come a focus on the quality of the business, can it sustain a growing dividend for a long time and so on. The dividend growth focus than slowly moved over to growth companies and with a focus on qualitive aspects of the company instead of the valuation and the numbers, but it still was a conservation about the valuation and companies that earned profits. This has transitioned in to today, where valuation is more of note and often missed when making a case or explaining a strategy. I would call it hype investing as companies in certain niches are getting valuations that are ridicolous high and even in a best case scenario are the intrinsic valuation hard to muster. Than adding on cryptocurrencies that are the hype of the hype-investing, but that may just seem natural as cryptocurrencies don't have intrinsic values and therefore could be hyped higher than anything else.
Hm undiscovered red flags... Only thing I can think of is irratic defense of themselves and their company. For exemple did Wirecard sue reporters, bloggers, and such for writing about the them being a scam. The opposite in reaction have we seen from Lars Wingefors when the analyst came with their short report "everything is as usual here in Värmland".
The biggest one and I had it as a rule before but, know will I have a cut in my investor heart which will remind me every time: To do my own analysis!
As with everything is the strategy evolving with me and I with it. But it is a combination with what I have read and experience, playing to my strenghts and interest, and most important constructing them after how I work and want to work with my investements. There are as many strategies as investors, so only compared with being passive.
I started with 37 000 SEK in 2011.
I have wrote the most about it in my post 7 års jubileum på börsen!. But to summerize first no clue what I did, simplified to invest in long trends, went on to a 3 portfolio set up with dividend/value case, growth, and moon shots, and now over to have no dividend focus still 3 portfolios with on core case portfolio, growth and value case, and last the moon shot portfolio.
Biggest things I tell myself when investing: Do your own analysis, play to your strength and interests, and raise the your gaze (thing long-term).
I will say one thing above all those source: Your own independent thinking, can you not apply independet thinking and reasoning about your portfolios and investments then you are only following everyone else and you will be last out or sell as soon you see some weakness. Uber important to create conviction and being comfortable about your investments.
But books I always recommend "Investera som mästarna" av Jonas Bernhardsson och "Köp billigt, sälj dyrt" av Mattias Eriksson. To get a mix of philosophy from a lot of investors and the necessary knowledge about valuation in the market.
Cassandra Oil - Didn't have enough critical thinking about the business and a small company with its dreams kinda mezmerised me and I thought this will be a billion dollar company and change the world... Well now I know that every small company with a new technology is having the same dreams.
Wirecard - Always do my own analysis when if a friend who you know do their research and trust, do your own. You cant borrow conviction.
The biggest mistake I would is having valuation as the first important metric to further look into the company and share. I have missed some very good companies due to high valuation stopped me from doing more research and really understand the value creation in the company.
Depends on the case:
But in general a product that has a long-run way, a businees models USP which is not superior tech (tends to not be superior in a few years and makes it very investment heavy to keep the USP) for exemple a selling apparoch which gives a very low CAC, asset light, high gross margins, high insider ownership, accounatble and driven management, and most important moats. To have an exemple which ticks most of my boxes are SaveLend which I cover at Redeye, look into it and as an exemple.
I dont have a system and it comes down to continue your research after you have made your initial research. For new ideas I usually have an idea what I want exposure against in the 6 six sectors I research cases in. But usually I change ideas more based potiential to my target price and risk. So in short R/R.
In general I dont regret much about my 10 years of investing, I have focused on honing my skills as an investor above haveing the highest returns. More important to not blow the portfolio than to have the highest possible return during a period of time when i have the least amount of capital.
But the biggest mistake as I mentioned above, focusing in the beginning on the valuation not the company in itself and putting it away due to high valuation.
I would tell me to do it completly the same way, I have nothing big in general that I regret about my investing journey. I usually advice people to it as I have but everyone has their own journey to make.
50/50, everyone else will say losses just because we as humans weights losses 7 times more than a win. But both has been really important in the experineces I have collected, meanwhile it is the losses that help me remember to not do the same mistake again. However, all wins are comfiring I am on the right way and have a investing process which creates excess returns.
You tell me... I have tried with significant others, family members, and in UngaAktiesparare to get girls more involved in investing their money. I think you need to find what makes them tick so to speak, but if they are not able to handle delayed gratification well maybe better for you to do it for them? Sometimes it is better to be good at different things.
Two apparoaches: Screening financial measures and qualitative searching for companies do different things in the six sectors I focus on. Motley fools industry is a good start for the second.
I would say dismissing companies based on high multiples before I understand the company fully to say what a fair valuation is for the company.
No, I think everything has changed 2-3 times.
Well, it is more about the behaviour than the money for me about the saving. I also think if you look at a year period it will still be significant increase of your net worth, but most of all you save to be able to use the dips when cash i more valuable than your holdings for your future returns.
CAGR 10,37% over 6,3 years. It has changed over the time, but fundamental analysis is the core always.
Freedom, I invest and save to have financial freedom.
I work the most on trying to raise my gaze (höja blicken) to have a long-term view on everything. Before I was more focusing on 1 year forward, I want to try focus 3-10 years forward depending on the company.
I didn't think, my apparoach was exploring and try to learn as much as possible. Lost 40% first 6 months so I learned a lot.
Biggest difference between a bad and a good investment, is if I have made my own research or not.
Wow hard question, a lot more aware of myself and what I want. Not thinking a lot about what everyone else think about my choices, hard time to time but I feel the best when I focus on what I want and not what other wants.
As mentioned before, focusing to much on the valuation in the beginning of the research process. Missed a lot of 10 baggers due to that.
Thanks for all your questions!