An idea for this series of articles (this will probably be a long one) came from a few readers who wrote to me asking about the exact issue described by the title. I thought it might be useful to do a few writeups on some general strategies to employ. No gaurantees of course.
Each of these strategies, like so many other things in life, would work when executed well but might fail when improperly done. Also, they might be mutually conflicting, so it’s important to keep an open mind. For example, I can tell you trade aggressively in one article, and to be patient for value to emerge in another article. It can be confusing; the right thing to do often comes from experience and gut instinct, and the worst thing is to be paralysed by confusion like a deer in the headlights. Indeed, what I often do is to mix-and-match, but always keeping an eye on the balance between fundamentals, sentiment and valuation, as well as constantly scouring for alternative better stocks to plough into.
The title is similar to that of William O’Neill’s book; however I can think of no other way to name it. I cannot profess to have made copious amounts of money off stocks but a crystallisation of my experiences and philosophies over the years would nonetheless be useful for future reference.
It is no coincidence that the first strategy is titled Back To The Basics. So many books have been written on this, that I shall not elaborate on how fundamentals drive share prices, how earnings are all-important, etc etc. Everybody probably knows this to death, thanks to Warren Buffett’s real-life example.