Tech stocks, “Big Tech” or the “Magnificent Seven” – the same the names get more stupid, the riskier investing in their stocks becomes. Many do not see it this way. For the bona fide investor these are core investments of their portfolios with great future potential. However, a critical look back at history tells us that the risk / reward ratio is not favorable. Size does not equal safety.
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There are many rules of thumb and well-intentioned advice for younger investors. One such “rule” says that it is better to buy stocks of older and proven companies. While I do not disagree with this on an isolated basis, I am missing the second part, namely that every business has a certain life expectancy. There comes inevitably a time for every company to either step into the background or to disappear altogether. History is full of examples.
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Especially stock market beginners get in touch early with ETFs and / or dividend investing, in part thanks to the respective communities and influencing faces. You can see both strategies separately or also in combination. However, a common thing I see e.g. on Twitter / X and YouTube is that these people promote them as being bullet-proof, save strategies. As a risk-focussed investor myself, I am clearly missing this crucial element.
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Real estate investment trusts have been a favored asset class of many due to enabling property ownership without enslaving oneself with mountains of debt and without betting just on one horse. Other factors like liquidity, the ability to sale fractions of your ownership and often great shareholder returns have been other arguments. I was avoiding them on purpose – but there’s a sub-sector that could be interesting just right now.
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Almost exactly a year ago I published a Weekly with the question whether it was the right time back then to buy silver. I rather referred to silver in physical form, respectively via ETFs which hold it in physical form, as I had difficulties in finding an investable stock of a producer that fit my strict quality filter. This industry is still a mess, as many miners are actively destroying shareholder value and / or are having difficulties with their costs, but also declining reserves.
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This question is likely one of those where you will receive many different answers, depending on who you ask. Advocates of big positions are likely to tell you that without decent individual positions in a concentrated portfolio, you won’t achieve any meaningful returns. Practitioners of many small positions, on the contrary, will warn you about the risks of putting all your eggs in one basket. So, who’s right, what is definitely wrong, and what to apply?
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Operating or net income, adjusted operating or net income, earnings per share (EPS), adjusted EPS and the price to earnings (PE) ratio are commonly used to assess a company’s business results and to value it. They are also often used as headline numbers and proof of performance by the companies themselves. However, there is a rising trend of decreasing “earnings quality” – an indicator that neither the economy is doing pretty well, nor many companies.
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One of the first major “mindset tips” new investors either directly receive from someone more experienced or stumble upon by themselves is to “buy and hold” stocks. The reasoning seems to make sense, as a longer holding period should level out short term fluctuations and enable a positive investing outcome. However, this concept does not take into account a key component, misleading many investors, often causing avoidable disappointments.
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Last week, I wrote about missed opportunities and their lasting impact on me. Actually, they hurt me more and stay with me longer than realized losses where I have taken my lessons learnt. Today, I want to discuss one of the most successful – if not even THE most successful – stock(s) of the last quarter-century. Nearly self-explanatory, this was a somewhat surprising business development that many (including me) have missed. Is there maybe a second chance?
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Over the last days, I was thinking about some personal stock investments that I either sold too early or even never managend to initiate at all – because I was waiting for a correction which never came. To the contrary, I have to really think longer and more intense about realized losses, just to name a few – not because there were none (there were), but because I threw them out of my mind.
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