Triumph of the Pessimists

The long history of the stock market suggest it pays to be an optimist – but investors in individual equities have reason to be a little more gloomy

Photo by Kind and Curious

It’s often said that to be a successful investor you need to be inherently optimistic. In other words, you have to believe that whatever crisis we are living through, over the long term the market will prevail and you’ll make money if you’re in it. It’s something I’m hearing a lot on Fintwit right now as markets tank.

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To Trade or Not to Trade

Why it might pay to follow the Nick Train mantra of “if in doubt, do nothing”

Photo by Artem Beliaikin

We’ve been hearing a lot of late about buying the dip (aka BTFD), displacing sell the rip as the prevailing mood. Fintwit is awash with people calling the bottom, suggesting that, after 8 weeks of falling – or, as some like to put it, oversold - markets and 1 week of gains, the bear market is over.

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Bouncing back

A quick look at ways to assess a company’s recovery prospects

Photo by Martin Sanchez

Life is messy, a truism that applies to companies as much as it does to people. For one reason or another, things can and do go wrong, even to the most organised people or best run companies.

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Strategic business analysis: How to SWOT those PESTs

The financials don’t tell you everything about companies – here’s how to start digging deeper to put the pieces together

Photo by Hans-Peter Gauster

Numbers matter in investing. They tell us, amongst other things, how fast a company is growing (or not as the case may be), how profitable it is, how efficiently it invests its capital and where that capital comes from, if its debt is manageable, and whether – most importantly of all – it’s generating cash, the lifeblood of any business, essential, at the basest level, to its survival and, when cash is abundant, for reinvesting in the business and rewarding its shareholders with dividends.

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Changes in valuation are a double-edged sword

Understanding the risks and opportunities that a company’s valuation might show is a crucial part of an investor’s toolkit.

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Phil looks at how investors can learn from changes in a company’s valuation over time.

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Valuation matters (eventually)

Great companies are not a buy at any price even if it feels like it. Phil repeats his concerns about the valuations of very good businesses and asks whether better opportunities now exist in cheaper shares.

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When I started my investing career nearly a quarter of a century ago, the prevailing wisdom was that to beat the market and get good results you had to buy cheap stocks. The problem with good stocks is that they were too highly priced and that the expectations of future performance were too rich and might not be met leading to disappointing returns.

The last decade or so has proved exactly the opposite.

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Is Wickes an unloved spin off?

Some simple techniques for analysing quarterly or half year reports can give investors valuable insights into a company’s performance and future prospects.

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In Joel Greenblatt’s excellent book “You can be a Stock Market Genius” one of his tips for finding potential winning stocks is to look at what are referred to as “spin offs".

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