Oddball Stocks on diversification

Interesting article on Oddball Stocks. I posted a response there, but it looks like his dog ate it. So I post it here:

“The problem is we think we might know our best idea, but we really don’t.”

Indeed. There’s a PDF being linked (sorry, don’t know what it is) on Twitter about catching falling knives. It noted that the median return was quite poor, but the mean was performed above average. I seem to recall Geoff Gannon saying the same thing about net-nets.

So it could be that there’s a significant “long tail” to value investing – in other words, it’s the few outliers that hit the ball out of the park, pay off the losers, with performance left to spare. That requires diversification, not concentration.

PS The one thing we do know for sure is that when blog requires authentication and captchas to submit a blog comment, there’s a significant probability that your comment will be redirected to /dev/null. Save your comments in an editor before posting.

About mcturra2000

Computer programmer living in Scotland.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s