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投資休養期:學而不思則惘 Consilient Lollapalooza


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I am a person who is curious on knowledge and have the passion to improve what I am doing. In investing, I always try to improve my capability by learning different schools of philosophy. Value investing, cigarbutt, program trade, chart, event trading, seasonality, macro, you name it. Yet, those KNOWLEDGE only help me understand why things happen from the own perspective of each knowledge, but they don't quite help me draft a executable guileline. I have learnt 10 set of knowledge but each time I can only use 1 of them or even less. I know I need to clarify the contradiction among theories and dig into their inner mentality in order to unleash the potential of the knowledge.

My friends are surprised how fast I equip TA. I am surprised so too. I think my TA trade have over 200% gain YTD, bring up my whole portfolio return bla bla, bla. TA exists as a knowledge and rules within my mind since 2003 acutally, but the knowledge cannot be used because the VALUE of TA simply contradict to my core value investing mindset. And I have failed to discover the value behind TA in order to unleash its potential. After the financial crisis, I got the KEY of risk management and the potential of TA knowledge start to show its importance then.

However, I am not satisfied with TA and value investing individually. I target to develop my own metal model to accommodate their contradiction. Some people may think that I am silly because that's unlikely to yield good result. Maybe. But I firmly believe that innovation is a source of great profit and that's a reward for those who proceed despite of large resistance from the norm. If fails, I go back to either of knowlege. What's the risk reward profile then?

If we have the right mindset(value and belief), we can have the right rules to execute with discipline. If not, probably we would be stuck in confusion and need to count on our emotion to make the choice. That's what we want to avoid.


Value Investing

Value
- Rationality
- Indepentence
- Discipline
- Permanent
- Realism

Meta Belief
- Regression to value
- Mr. Market Hypothesis
- Margin of safety, no leverage, diversification can tackle short term negative outcome.

Value belief
- Permanent Value
= Sum of future FCF
Good Value
= sustainable advantage + good managers
Cigar Butt Value
= Relatively cheap, no edge

Undervaluation belief:
- Price-anchoring
- Event Driven
- Mis-catagorization
- Market

Optional Belief
- Regession of marco value outweight that of micro value
- Margin regression consideration
- Economic Cycle consideration

Questions:
1 Future FCF - how to calculated? Based on what? how to do so rationally?
2 Macro consideration, economic cycle, to be ignored? yes, then? no then?
3 Under-valuation belief? how to know? when to act? why?
etc.

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