Heads or Tails? Either Way, You Might Beat a Stock Picker

Imagine a world where investors in the stock market have no skill whatsoever. The investors themselves don’t understand this, however, and many truly believe that they are good at what they do. But in this thought experiment, there’s no doubt about the underlying reasons for fund managers’ success: When they turn in an outstanding performance, Read more…

Ten Stocks for Ten Years

‘Ten Stocks for Ten Years’ – that was the headline in The Australian Financial Review nearly 5 years ago. The paper had interviewed analysts to identify 10 stocks to ride out the next decade with. Nearly half way through, how are they going? Resource and energy stocks topped the AFR’s December 2009 list of the Read more…

Investor Rocket Science

When the media raises the subject of beating the market through astute stock picking, the name ‘Warren Buffett’ is usually cited. But what does this legendary investor actually say about the smart way to invest? Buffett is considered to have such a track record of picking stock winners and avoiding losers that his annual letter Read more…

Top Drawer Investment

One old adage about investment is that you buy a bunch of reliable stocks, stick them in your bottom drawer and forget about them. That ignores one pesky fact: Nothing stays the same. Small stocks don’t always stay that way. Some grow up to become large stocks. Stocks that have low prices relative to fundamental Read more…

Down the Investment Mineshaft

Success in investment doesn’t just mean knowing what risks to take. It also means avoiding the uncompensated risks associated with laying out big bets on individual companies or sectors. In February 2008, the global credit crisis was underway. With investors in a defensive mood, The Australian Financial Review suggested that the minerals resource sector of Read more…

The Broccoli and Pizza Portfolio

For some of us, it’s hard to give up on the idea that investment should be exciting. Picking stocks can be fun, after all, and there’s nothing like getting your timing right and bragging about it later with friends. For all the accumulated wisdom about asset allocation and understanding risk, and about diversification and discipline, Read more…

Buffett’s Gold

Here’s an extract from Berkshire Hathway’s 2012 annual letter to shareholders where Warren Buffett shares his thoughts on gold as an investment. The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever Read more…