I haven’t posted anything since February when I suggested the bear market, which I believe started in May 2018 was still in play, I am still of that opinion. Someone said that for a bear market to be valid the index has to fall 20%, I believe a bear market starts when an index top remains unchallenged and more importantly making money is very difficult. With this in mind, making money that is, I have been reading The Art of Execution by Lee Freeman-Shor, it is a brilliant analysis of money management and more importantly it isn’t very thick, it’s big print and for me, easy to understand.
The Author controls billions of dollars for Old Mutual and hands out these billions to well respected, high profile fund managers, who have good ideas and think they are gods answer to the investment business. What he found was that they suffer from the same illness as we the ordinary mortals. It isn’t simply when to buy or even what to buy, perhaps the most important skill is knowing when to sell. Which was the first question I asked on Stockopedia shortly after I joined in 2014.
What goes down does not always come back up. If you are a “Rabbit”, the authors term, not mine, you don’t sell, you are long term! Well that's easy- no decision required, if it falls 90% it will take a 900% rise just to get back to the buying price, even a 50% fall requires a 100% rise and as there are very few opportunities that rise by these very attractive number the losers eat away at the winners to leave only crumbs for the investor.
He monitored the trades, or lack of them, of all those who promised good returns from great ideas and then wrote a book about how not to do it. He gives clues about what just might be the right way to wealth beyond your wildest dreams. All based upon fact not fiction or wishful thinking. In my mind it ranks alongside Mark Minervini and deserves a place on every investor’s bookshelf. If you think you’re a great investor ask one simple question, why aren’t you rich? If you are rich as a result of being a great investor don’t buy the book, but remember, the great, often quoted Jessie Livermore died broke.
