paulren's blog

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Not all can be below or above average.

Surveys show that most people believe they drive better than the averages, even while we know this can't be.  Too many financial advisors recommend individuals should invest only in ETF index funds because surveys show average investors can't beat the stock index.  If we wrongly assume we are all better than average drivers, we also wrongly assume we are all likely worse than average investors.  Further, as is rarely pointed out by these pros',  individual investors command select key advantages over large liquidity obsesses institutions; these have mandates not to consider smaller companies -which nevertheless combined often make-up the majority of a country's economy.  Not least, many smaller firms are growing faster than the averages and pay higher dividend yields.  While ignored by the institutions, these are to be pruned and picked by us, the empowered individual investor.
 

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The Buy and Hold fallacy.

So called "Buy and hold" investor advocates', try (often in disguise), to support the notion not to be an active investor around individually selected securities -and then to micro manage these through selective profit taking and re-balancing over time.  Many for various reasons want you to believe to just "buy and hold" the portfolio, even while the world is changing faster than ever before.  Managing a portfolio of securities is a form of art and one which can be learned and when done with some discipline and skill can lead to substantial greater returns over time.  Especially if one appreciates some distinct advantages individual investors have over mega institutions with their share liquidity constraints.

 

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Monitor Insider Transactions.

An  astute investor can check insider buying or selling by company directors or their key insiders.  Such share transactions-activity must be filed to the SEC regulators, as in Thailand they must and do.   While insiders may have many reasons to sell;  there is only one reason why they would buy.  An insider may have to pay for a wedding, a new car,  an education for his/her children, a trip, a new house,  etc...but when an insider buys it just about always means they think their stock is presently undervalued.  Of course, they can be too early or late or outright wrong, but its a solid additional investor tool to confirm other supporting fundamental analysis -when considering investing in a listed companies's stock.  We here follow such activity consistently.

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