tag:blogger.com,1999:blog-5465015914589377788.post7153380138090652010..comments2024-03-20T09:32:16.592-04:00Comments on Michael James on Money: The Stock-Picker’s ChecklistMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-5465015914589377788.post-4807132807404101532015-01-28T23:04:02.653-05:002015-01-28T23:04:02.653-05:00My portfolio is now 67% stock 33% FI (It was 3 ye...My portfolio is now 67% stock 33% FI (It was 3 years ago 75%/25% when I was still earning and accumulating). It is difficult to find a benchmark to use and stick to for long times (decades) as goals and asset allocations change.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-90359015553671563042015-01-28T22:48:17.195-05:002015-01-28T22:48:17.195-05:00@Anonymous: According to what I found online, FPX...@Anonymous: According to what I found online, FPX Growth contains 10% T-bills, 20% medium term bonds, and 70% stocks (a mix of indexes). This would not be an appropriate benchmark for a dividend stock portfolio. The cash, bonds, and lack of value tilt throw off the comparison.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-77084715225262038922015-01-28T22:14:37.145-05:002015-01-28T22:14:37.145-05:00Interesting post - seems very applicable to those ...Interesting post - seems very applicable to those who start out stock picking to move to indexing. I started as indexer and over time migrated to stock picker..... oops. Nothing wrong with indexing - but for me (withdrawal stage) lower costs for (dividend growth) income win out. In Canada with the unbalanced nature of the market (Heavy in resource/financial) I do not think it is unrealistic to achieve some small alpha. for US/International that is a much harder task. I have used FPX (Growth) benchmark which is primarily Canadian and have achieved a small alpha over 3/5/10 yearsAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-9257631994636164032015-01-28T19:07:45.671-05:002015-01-28T19:07:45.671-05:00I do, a number of winners but to your points above...I do, a number of winners but to your points above I wouldn't need to worry if I was an indexer :) <br /><br />#slowingconvertingMy Own Advisorhttp://www.myownadvisor.canoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-85930241661840628742015-01-28T18:21:14.788-05:002015-01-28T18:21:14.788-05:00@Mark: I had to look up COS to remind myself what...@Mark: I had to look up COS to remind myself what business it represented. Ouch. I hope you didn't own too much of it. No doubt you have some winners to compensate.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-70183458170607592142015-01-28T17:54:58.056-05:002015-01-28T17:54:58.056-05:00I'm well aware how much I'm down on COS. :...I'm well aware how much I'm down on COS. :( We'll see how the earnings report goes tomorrow.<br /><br />Thanks for sharing some of your lessons learned.<br />MarkMy Own Advisorhttp://www.myownadvisor.canoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-65199486195097688732015-01-28T10:58:58.085-05:002015-01-28T10:58:58.085-05:00@Woz: Conditionally including bonds and cash is an...@Woz: Conditionally including bonds and cash is another good one. There's no end to the ways you can fool yourself.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-51953223737332617442015-01-28T10:54:43.902-05:002015-01-28T10:54:43.902-05:00@Woz: Thanks. I like the double-down idea. I gue...@Woz: Thanks. I like the double-down idea. I guess that's an advanced form of checklist item 2 where you calculate returns separately for each stock.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-57128955464170773362015-01-28T10:54:42.956-05:002015-01-28T10:54:42.956-05:00Also, if you have to calculate your return, don’t ...Also, if you have to calculate your return, don’t include your cash/bond holdings … unless the market goes down, then include it.Woznoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-12847777643163493612015-01-28T10:38:34.419-05:002015-01-28T10:38:34.419-05:00Nice list.
I've got one more. Always double ...Nice list.<br /><br />I've got one more. Always double down on your losing stocks. That way your 20% loss only looks like a 10% loss. Plus it’s easy to rationalize as buying low/being a contrarian/buying when there’s blood in the streets.Woznoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-67412973152891268562015-01-28T10:03:21.331-05:002015-01-28T10:03:21.331-05:00@Anonymous: I think you misunderstand both my comm...@Anonymous: I think you misunderstand both my comments and those of Buffett and Munger. Buffett and Munger's remarks about temperament apply to any style of investing including index investing and stock picking. Choosing between index investing and stock picking should be decided based on skill (unless you don't care about money). The only way to measure skill in stock picking is to make comparisons to a reasonable benchmark. My choice of passive investing has little to do with my "emotional makeup," although you could argue that my ability to measure my returns against benchmarks fairly is only possible due to an ability to think rationally. Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-83647479689510686662015-01-28T09:56:52.344-05:002015-01-28T09:56:52.344-05:00An anonymous commenter's comment seems to have...An anonymous commenter's comment seems to have gotten lost:<br /><br />Good that you made a choice appropriate to your emotional makeup. Investing isn't an easy skill to master. Your essay reminds me of this clip from an interview with Buffett and Munger about 5 years ago:<br /><br />Munger: We’ve learned how to outsmart people who are clearly smarter [than we are.]<br /><br />Buffett: Temperament is more important than IQ. You need reasonable intelligence, but you absolutely have to have the right temperament. Otherwise, something will snap you.<br /><br />Munger: The other big secret is that we’re good at lifelong learning. Warren is better in his 70s and 80s, in many ways, that he was when he was younger. If you keep learning all the time, you have a wonderful advantage. Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-82102035122042926942015-01-28T09:52:50.536-05:002015-01-28T09:52:50.536-05:00@Robb: I hear this from people who switched adviso...@Robb: I hear this from people who switched advisors as well. Unfortunately, they tend to look at absolute returns. For all they know, their previous advisor was beating the market during the tough times and their new advisor is lagging the bull market badly. People like this are almost certain to change advisors again during the next bear market.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-48254687573109586842015-01-28T09:32:33.331-05:002015-01-28T09:32:33.331-05:00One argument that I notice is from folks who dumpe...One argument that I notice is from folks who dumped their advisor after the 2008 crash to become a DIY stock picker and now proclaim that their portfolio is doing much better than ever before, while completely ignoring the fortunate timing of entering a five-year bull market.Robb Engenhttp://www.boomerandecho.comnoreply@blogger.com