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2016-12-05

  • batbeer2 commented on Geoff Gannon's article 12-05 14:29
    Why I Concentrate
    Someone who reads my blog emailed me this question: “What is the maximum concentration you would employ in any single stock, why, and under...
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    batbeer2 12-05 14:29
    • >> So you have all these people with all these different portfolios, fully confident they have picked the right 5 or 10 stocks. That's a lot of over-confidence out there.

       

      Overconfidence is perhaps not the only reason why different people end up holding different stocks.

      >> I just don't see many people who even if they had the time could or would do the things Buffett has done.

      Good point. IMHO. Like say.... professional tennis, you can make a lot of money but probably not if you are in it for the money.

      >> I have seen Andrew Welling at Lyrical say that he may be able to order his favorite stock investments from 1 to 33. But when he actually analyzed the performance he could never predict which stocks would perform best. Sometimes his 5 least favorite ideas would be the best.

      He is using half his brain. Maybe a brilliant half but still half. It is not only about predicting which ideas will go up most within a certain timeframe, it is also about predicting your behaviour if one of your holdings drops 50% tomorrow. That may vary from one stock to another.

      In other words, give that guy a punchcard and observe what he then does differently. 

2016-11-30

  • batbeer2 commented on Holmes Osborne, CFA's article 11-30 08:33
    Will Storage REITs Keep Rolling?
    Storage REITs have been on quite a roll over the last few years. We will take a look at three: Public Storage (PSA), CubeSmart (CUBE) and National...
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    batbeer2 11-30 08:33
    • >> I never understood why these storage places have been popping up everywhere and whether it was a one-time thing. Can this continue to grow? Any thoughts on why they have been popular for a decade?

      It is not about the storage, it is about the network.

      Used to be you had a PC at home and that was where your information lived. You accessed the interweb to read what certain companies had to say. Now you have all sorts of devices and you want your "personal" information to be available on all of them. That includes FaceBook and your Youtube videos etc. So for various reasons your info now wants to live in a central place (not your PC) but not on the other side of the world relative to where you usually are. Again, the network doesn't like that. 

      In the past decade:

      1) the amount of digital info has grown. You now have terabypes per capita instead of gigabytes.

      2) The information has moved from the harddrive on your PC to some place on the internet (it is datacenter for a reason). 

      I have no opinionaboutf the first trend other than that I think it is unlikely to reverse. About the second trend, I think that is done now. If you forced me to bet I'd say there will be growth but at a lower rate than in the past 15 years.

      Also, Datacenters can store more/sqft as technology progresses so it is very much not a safe bet that the demand for floor space is going to grow as fast as it has.

      Just some thoughts.
  • batbeer2 commented on Geoff Gannon's article 11-30 07:56
    Why I Concentrate
    Someone who reads my blog emailed me this question: “What is the maximum concentration you would employ in any single stock, why, and under...
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    batbeer2 11-30 07:56
    • Thanks for an article worth reading.

      One underappreciated factor is time. In this case I mean the time you need to properly analyse a holding. If you have not done meaningfull analysis then I think it is fair to say: 


      You are taking unneccessary risk.
      Even if (by luck) you pick a safe stock, you won't have enough confidence to buy a meaningfull position and/or hold a volatile position. 


      For the sake of this discussion I'll take 500 hours as a reasonable amount of time to analyse a given position. On that assumption, one can reasonably anlyse 3-5 stocks per year. What does that mean for your portfolio size or turnover? What does that mean for an investor with an unrelated day job?

      Another way to put it is, if you don't have the time, it is irrational to hold a lot of (or in fact any) stocks. 

      Just some thoughts.

2016-11-25

2012-04-22

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