Equities Strategy

stphnstevey

There seems to be a fair number of intelligent investors on here that have turned there hand to equities

How do you invest in equities and what strategies do you use?

bostonerimus

Forget about strategies.......if you want to invest in equities learn about asset allocation and expect to be invested for at least 10 years.....20 or 30 is better.

Thrugelmir

stphnstevey wrote: »

There seems to be a fair number of intelligent investors on here that have turned there hand to equities

How do you invest in equities and what strategies do you use?

Buy and hold. Invest for the long term. If you wouldn't own the shares for 10 years then don't buy them at all.

Invest into cash generative companies.

Don't expect to find value amongst larger companies. You'll be getting the news long after others have. Nor will you will access to the detailed research that gets published.

If you invest in a contrarian manner. Expect to underperform the market as well as out perform.

Cut your losses promptly.

At the core of your portfolio invest in a broad diversified fund or investment trust. Boring but safe.

ValiantSon

Thrugelmir wrote: »

Buy and hold. Invest for the long term. If you wouldn't own the shares for 10 years then don't buy them at all.

Invest into cash generative companies.

Don't expect to find value amongst larger companies. You'll be getting the news long after others have. Nor will you will access to the detailed research that gets published.

If you invest in a contrarian manner. Expect to underperform the market as well as out perform.

Cut your losses promptly.

At the core of your portfolio invest in a broad diversified fund or investment trust. Boring but safe.

Perhaps you could explain what you mean by this as the OP could easily take it to mean that they should sell investments that have fallen in value. That would be terrible advice as it would crystalise a paper loss, whereas remaining invested would most likely result in an increase in value over the long term. I'm sure that you didn't mean to suggest this, but that is how the sentence reads.

stphnstevey

Thanks for this

I have seen FUNDSMITH mentioned a few times, why are others keen on their funds?

Thrugelmir

ValiantSon wrote: »

That would be terrible advice as it would crystalise a paper loss, whereas remaining invested would most likely result in an increase in value over the long term.

This precisely why I made this point. There's no room for sentimentality when investing. More often or not. The money would be better invested in an existing portfolios winners.

bowlhead99

ValiantSon wrote: »

Perhaps you could explain what you mean by this as the OP could easily take it to mean that they should sell investments that have fallen in value. That would be terrible advice as it would crystalise a paper loss, whereas remaining invested would most likely result in an increase in value over the long term. I'm sure that you didn't mean to suggest this, but that is how the sentence reads.

If you were investing into 'funds', your advice to remain invested while the values are low makes perfect sense because nobody wants to sell at a low value and miss them going back up over the long term.

However, Thrug seems to be talking about his strategies for investing into individual equities, cash generative companies etc.

When you are going out on a limb to select individual companies rather than buying a fund that holds 'the market generally', you will inevitably select some which do not perform as you wish and a fall in value can be an indication that something in your initial investment thesis was wrong; or a reason to invest that you had initially found compelling, no longer holds true.

If you belligerently hold on to the shares in the belief that you wouldn't have made a mistake and what goes down must go up, you end up being a holder in HMV, Blockbuster, Enron, Northern Rock etc as they become less and less valuable and then go pop. Better to recognise your mistakes or poor choices and cut them, rather than hold on believing 'this one owes me money because I paid x for it' as some naive investors can end up thinking.

To an extent, with funds it's different as though they can suffer a permanent loss of value through bad investment choices, they don't end up calling the receivers in and having no money to pay out to owners, as individual companies can and do.

Voyager2002

Thrugelmir wrote: »

This precisely why I made this point. There's no room for sentimentality when investing. More often or not. The money would be better invested in an existing portfolios winners.

I also think that this is terrible advice: as is often pointed out, past performance is no guide to future results.

Alexland

I wouldn't buy individual assets for which I was likely to need to make an urgent decision to reduce losses. I prefer funds where losses are buying opportunities.

ValiantSon

bowlhead99 wrote: »

If you were investing into 'funds', your advice to remain invested while the values are low makes perfect sense because nobody wants to sell at a low value and miss them going back up over the long term.

However, Thrug seems to be talking about his strategies for investing into individual equities, cash generative companies etc.

When you are going out on a limb to select individual companies rather buying a fund that holds 'the market generally', you will inevitably select some which do not perform as you wish and a fall in value can be an indication that something in your initial investment thesis was wrong; or a reason to invest that you had initially found compelling, no longer holds true.

If you belligerently hold on to the shares in the belief that you wouldn't have made a mistake and what goes down must go up, you end up being a holder in HMV, Blockbuster, Enron, Northern Rock etc as they become less and less valuable and then go pop. Better to recognise your mistakes or poor choices and cut them, rather than hold on believing 'this one owes me money because I paid x for it' as some naive investors can end up thinking.

To an extent, with funds it's different as though they can suffer a permanent loss of value through bad investment choices, they don't end up calling the receivers in and having no money to pay out to owners, as individual companies can and do.

Perhaps wrongly, I assumed that he wasn't recommending investing in individual companies as that would be crazily high risk for a small investor (and especially one new to investing), so I took all comments to be about funds.

Thrugelmir

Voyager2002 wrote: »

I also think that this is terrible advice: as is often pointed out, past performance is no guide to future results.

This applies to funds not directly investing into equities. Totally different scenarios.