- Fund manager should find a style that works for them personally and stick to it. They must be fundamentally happy with their own mode of operation. If you do like the crowd, your results will be like the crowd.
- Banks, rather than institutional investors, are the dominant shareholders in continental Europe.
- Mark Twain: “History never repeats, but sometimes it rhymes.”
- The key to success is as much to avoid losers as it is to pick winners. However, a defensive style that avoids all losers is counterproductive to superior returns.
- When things go wrong, money is often lost in companies with weak balance sheets. Also, look for corporate angles, such as buyouts.
- Understand the business: how likely is the business going to be here in 10 years, and how likely is it going to be more valuable than today?
- Understand the key variables that drive a business: ideal business is largely in control of its own destiny. Watch for things out of a business’s control: currencies, interest rates, tax changes.
- Favor simple over complex businesses: ability to generate cash is very attractive attribute—stock market overvalues growth and undervalues cash generation. Better to have a great business run by average management than a poor business run by stars.
- Try to think two moves ahead of the crowd: like chess, the stock market doesn’t look too far ahead. Anticipate currently ignored companies that will impact investor psychology in the future.
Finished: 27-Sep-2006