Cluster Family Office Blog

The thoughts I am about to set out may not be shared by younger readers, or indeed it is quite possible that hardly any of you will agree with them. But I have come to these conclusions after 20 years of observing markets in almost every colours and to get to know the profiles of investors who are quite greys. Let me make it clear from the outset that I do not intend to teach anyone anything, nor do I claim to be above good and evil – not least because it has taken me a great deal of effort, involving learning from my mistakes, bearing the scars and spending money, to arrive at these reflections. What’s more, I would gladly settle right now for being just halfway through a certain experience. Having said that, I recommend that you read (if you haven’t already) this article by The Rebuzner in which he offers a very interesting and entertaining analysis of investors and our ego. Now that we’ve set the scene, here are some additional points to consider which most of us tend to overlook, even though they’re obvious:

In a market of RV In a bull market, almost all of us investors make a profit, and in a bear market, the opposite is true. We usually look for the key to success in maximising profits during the boom and minimising losses during the downturns. Few of us would consider stopping investing in the stock market before we’ve got our fingers, wrists and forearms badly bruised. Who is forcing us to swim against the tide when we could be standing on the shore considering other forms of investment? It is true that, in the long term, the statistics show that returns as a whole outweigh bear markets. But no one can guarantee that we will live long enough to benefit from that average. Many investors lost all their money and/or their lives before the statistics could bestow their well-deserved blessing upon them. Nevertheless, if one retains enough investment capacity and good health to see the sun rise again, one will experience a few years of abundance during which it is best to put oneself in expert hands and learn – whilst enjoying – the journey.

But most investors confuse complexity with profitability. Many believe that doing something different from everyone else will lead them to success. This may be true, for example, in the business world, as setting ourselves apart from the competition usually yields good results. But in the markets, things are different, Competition becomes our ally and the majority view will prevail in the most efficient way. It is certainly true, as our much-admired Rebuzner that many people often think they are smarter than the market as a whole. They confuse the word «investment» and believe it defines what will happen to the market trend in which they are investing their money. Why should the trend of a security, sector, etc. invert Just when we decide to put our money in the opposite direction? Why must the majority agree with us the moment we start going against the grain? Isn’t it easier to go with the market in a prudent way, with solid assets and undervalued Should you back promising young talent or go against the grain? Mind you, I’m not saying it’s more profitable, just that it’s easier and better suited to the capabilities of most investors.

Of course, buying a company with exemplary fundamentals whilst its share price is plummeting is a perfectly valid and profitable strategy, but one that is not suitable for most ordinary people. The example of the ‘golden knives’ from Rebuzner It’s very vivid. But neither financially nor emotionally are we all prepared for investments which, although highly profitable in the medium term, make life difficult for us in the short term. In Technical and Fundamental Aspects The four risk management techniques for investments are discussed value, namely:

(a) Invest only in companies whose business we understand.
(b) With low financial and operational risk.
(c) Buy below intrinsic value.
d) Always take a long-term view.

Unfortunately, none of them are within the reach of most deadly investors: Understanding of these businesses is severely limited by a lack of information, time and/or expertise; the financial and operational risk posed by these companies is unlikely to be accurately assessed unless the first condition is met; buying below intrinsic value in a bear market will require a level of nerve and foresight that is uncommon amongst most people, whilst in a bull market few will recognise that needle in the haystack amidst the lack of information; finally, the culture of quick profits and a lack of experience will mean that very few will stick to a long-term strategy.

I’m not saying that the investor value I’m certainly not wrong, as I personally feel closer to him than to the fundamentalist or the die-hard technical analyst. But for most deadly investors These methods are beyond their reach. The average investor needs to simplify their strategies to suit their circumstances. That is why, when I read or see on channels such as tv Financial advice and tips on investing in the markets make me think. How would we view doctors (or quacks) who prescribed medicines to improve health without tailoring them to each of their patients? When I see in the media: ‘Buy, sell, hold,’, overweight This or that gives me the creeps. It’s as if I were looking at a generic recipe aimed at the whole audience, along the lines of: Please take Two tablets of this or that every 8 hours to live longer and better.

I would like to reiterate that I am not questioning the profitability of all these investment strategies, but rather their accessibility and adaptability for the average person. Unfortunately, over the years I have come across countless ordinary investors who believe they can learn to be immortals. They believe there are two types of investors in the world: those who still have a lot to learn and lose money; and those who have learnt a great deal and make a fortune to infinity and beyond. They are convinced that by training hard enough and gaining experience, they will reach the rank of immortal investors, capable of making consistent profits on the stock market and infinitely. They have examples in mind such as Buffet, Soros, etc. A grave mistake. Partially aware of their limitations, they would be content with a small fraction of the fortunes mentioned (sic). But the mirrors in which they see themselves are exceptional cases that prove the rule. Unfortunately, the rules of the game are different for the deadly investor.

Pragmatism, an awareness of personal circumstances, bearing in mind that stock market cycles are not always compatible with our individual circumstances, financial situation, family situation, timing and goals that are vital for determining acceptable risks, and humility – a great deal of humility – amongst many other things that I cannot quite bring myself to list.

For those with less expertise: simplicity and focusing exclusively on bull markets, guided by good fund managers with an indisputable track record.

May God grant good fortune to the most capable…

Hello, my name is Gurus Mundi, I am a deadly investor.