Jack Brumby

‘You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.’ — Warren Buffett Another day, another Warren Buffett quote... He's right though. Successful investing can be relatively simple. Nowhere is this more obvious than in the persistent outperformance of relative strength strategies, where investors buy companies that have outperformed…

Do you put more thought into buying a stock or selling it? Presumably, it’s the former because it’s official: we’re bad at selling stocks.  Or at least professional portfolio managers (PMs) are, according to a report called Selling fast and buying slow: heuristics and trading performance of institutional investors. The study tracks 4.4 million buy and sell events across 783 portfolios between 2000 and 2016.…

When it comes to balance sheet quality, clarity matters. Unfortunately, this is not always what we get. We’ve all come up against company accounts that we just don’t understand. That’s not to say the investor is not good enough for those accounts. It sometimes means that those accounts aren’t good enough for investors. They lack transparency or an appropriate level disclosure. Admittedly, it is impossible…

Not all profits are made equal. For most investors and analysts, the Income Statement is the first port of call. That’s why it is home to all manner of financial shenanigans and accounting trickery. Yes, company A and company B both generated net income of £100, but how did they generate that net income figure? The importance of this question is why we have the…

We’ve all seen the warnings. Past performance is not a reliable indicator of future returns. The value of an investment can go down as well as up. You might not get back the amount you invested. Risk is a part of the game in investing, but it’s hard to see and easy to forget about. That is partly why many fund managers often construct an…

When you say 'selling randomly' do you mean because there has been no specific company-related development to prompt the sale?I would say you aren't so much selling randomly as selling systematically and taking a portfolio view rather than a stock-by-stock view. Rebalancing allows you to draft in stocks that are better aligned with the portfolio strategy of high relative strength. If you don't rebalance, you…

Thanks HumourMe, I was trying to find a passage from the original study - should've known just to check our own guide!

Thanks for the insight. Your point on valuation reminds me (in a more general sense) of Patisserie Valerie and the difference between going concern and liquidation values. I can't remember the figures, but a supposedly c.£400m company disassembled for tens of millions, if that. It would be interesting to know how much inventory values dropped in that instance. An extreme case, of course.

Hi Ambrosia, Thanks. The current ratio is a liquidity ratio that measures a company's ability to pay its liabilities that fall due within a year. As Brigra points out, you can find it on the StockReport of a company. It is on the right-hand side about halfway down in the 'Other Ratios' box (under the Magic Formula Score). To calculate it yourself in future all…

Hi Nick, You read my mind! Just published this on balance sheet quality https://www.stockopedia.com/content/balance-sheet-quality-and-three-simple-safety-rules-479626/ I think it covers your points but any comments are welcome