How to deal with mistakes to avoid negative compounding

One of the hardest disciplines in investing is how to handle unrealized losses. These positions not only tie up capital that could be invested elsewhere, but they also can paralyze an investor. In its worst shape and form, this condition leads the focus on distractions, not on what’s generating the performance for the portfolio. This is a topic every investor should from time to time think about in order to improve personal investment skills and to avoid being drawn into a negative spiral.

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Is focus-investing risky?

One of the first principles a new investor stumbles upon is “don’t put all eggs in one basket”. In other words, diversification is said to be the key to investment success. My longer time readers know that I am strictly opposing this approach in its extreme form. The viewing angle might be even the right one – winning by not losing, respectively by minimizing risks – which is also my strategy. However, there’s a material difference between buying blindly a big basket and focussing on a few investments where one has done the homework.

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Interview with a fellow investor + YouTuber

Herewith, I am happy to publish another interview – my third in total and this time with Darrell Thomas who invited me several times to his growing YouTube channel “The Money Levels Show”. As a stock investor and blogger myself, I am always interested in what my colleagues are thinking, saying, writing or in this case broadcasting about different topics regarding stock investments. 

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The case of NIKE – NOT worth every price

About two weeks ago, the stock of former darling Nike collapsed by 20%, something many thought could not be possible for a market leader. Especially, as Nike’s shares have fallen already by 40% from their all-time high at truly excessive valuations. But of course it’s possible, as a lower stock even by this margin is not automatically an attractive investment from a risk and reward perspective (sorry buy-the dippers). Today’s Weekly is a lesson about valuations and market behavior, something we need to remind ourselves all over again not to fall into valuations traps, no matter how bullish sentiment is.

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The untold risks of average returns

This headline might sound confusing at first sight, but behind it is a topic worth thinking about. As one understands what’s behind “average returns”, a portfolio check-up could be appropriate, especially if one is overweight in stocks with past above average performances paired with high valuations. A few thoughts on risk-adjusted investing.

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Quitting at a loss to free up capital and the mind

Today, I’m writing about one of my (former) best stock ideas which didn’t play out as initially thought. Besides describing the case and the reason that led me to throw in the towel, I also want to use it to show why it’s important to regularly go over one’s portfolio and to cut the weeds.

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Why I don’t like diversification

Buying either parts of or even entire other companies is a common way for businesses to grow. This inorganic route though is often used for empire building (higher salaries and bonuses), sometimes even to hide own problems inside the core business (presenting an external growth story) and more often than not destroying shareholder value by overpaying for the targets. Today, I’m discussing a company that is losing through diversification.

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Why it makes no sense to copy Warren Buffett

This is a topic I’ve wanted to write about for a while. Those stock pickers who decide not to migrate to the camp of chartists, tee leaf readers or other witchcrafts, will likely join the group of value investors. In this context, the name of Warren Buffett must not miss. Many investors claim to emulate his strategy, others try to seek inspiration which stocks to buy. Today, I will show that both are delusions.

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