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Investment Strategy
I trade... monthly
I tend to buy... after much research
I hold for... years
I invest with... <£500k
Diversification is ... essential to reduce risk
I focus on high quality companies - that is, companies with high returns on capital, in cash, where I believe there are reasons that those returns can be sustained. My research is a mix of quantitative and qualitative, as I believe a pure focus on financial analysis or quantitative factors can miss certain unusual investment opportunities - for example, investments in industries or businesses where traditional financial metrics are misleading. I am a strong believer in diversification. I currently hold just under 30 shares, and am gradually increasing that number. Partly, this is because I hold a number of small/mid cap shares, and in my view more diversification is needed as you go down the market cap spectrum (as you're holding less internally diversified businesses), so my portfolio needs to reflect that. Partly, it's that I'm sceptical about the confidence level one can have in any individual business. And partly it's behavioural - I react better to bad news/price drops when they're a relatively small part of my portfolio. I don't think I have the temperament to invest in a highly concentrated portfolio as the inevitable drops would cause me to lose my nerve.

LongbeardRanger's Latest Blogs

A few weeks ago I participated in an interesting discussion here about the pitfalls of accruals, and how companies with accruals-based earnings are net underperformers, over time. This creates a big problem if you want to invest in financial firms, who are the "poster boys" of accruals-based accounting.  In this context I thought it would be interesting to take a look at the one financial…

LongbeardRanger's Latest Comments

Roland, Good article, you highlight a lot of the issues with using screens to assess banks. (Some of the same difficulties crop up with insurers - and, in fact, any company that isn't a normal trading company.) Personally, I feel that the best measure for a retail bank is price to deposits. It's a bank's deposit base (sticky, low cost or free funding) that allows…

Graham, Re System1 - you comment: It's a huge reduction in PBT despite a relatively modest reduction in gross profit, which I believe is attributable to much higher staff costs after some new hires were needed to bolster the offering. It's the old problem with investing in consultancies - the revenue split between staff and shareholders can end up primarily favouring the latter I can…

James, I will say this. The absolute worst thing funeral providers can do, as a group, is sign up to your service. Why? Because it will make the industry more competitive, and in particular, more price competitive. (My rule of thumb is that competition on quality, speed of delivery, customer service etc, are all ok from an investment perspective - but when an industry starts…

Hi ratioinvestor, Honestly, I'm sceptical about this type of thing. Now, to be fair, I haven't seen the programme in question. So, you can dismiss this if you want. But, I think there's such a strong incentive on the programmers to find things to criticise. Because that's what makes for interesting programming. It's not interesting to do a programme on a consumer service like this…

Hello Ed, I'm not invested in Burford Capital (LON:BUR), and never have been (sadly!) so no particular axe to grind there. However, I do think there are some stocks which do not "fit" traditional screening and ranking metrics well and where, therefore, algorithm- or rules-based investment approaches (such as the stockranks) are less likely to work well. Usually this is where the accounting does not,…

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