#TheIntelligentInvestor #BookReport This chapter was legit painfully long ... as is this post, so so

• 08/29/21

#TheIntelligentInvestor #BookReport This chapter was legit painfully long ... as is this post, so sorry. I was confused for most of it and only in hindsight after reading the commentary did this one start to clear up a little. Chapter 7 is entitled - "Portfolio Policy for the Enterprising Investor: The Positive Side." Apparently I'm not cut out to be an #EnterprisingInvestor . "The enterprising investor, by definition, will devote a fair amount of his attention and efforts toward obtaining a better than run-of-the-mill investment result." (Rev Ed p 155) So ... I'll stick to the #PassiveInvestor model and keep my day job. "The activities specially characteristic of the enterprising investor in the common-stock field may be classified under four heads: 1. Buying in low markets and selling in high markets, 2. Buying carefully chosen 'growth stocks', 3. Buying bargain issues of various types, 4. Buying into 'special situations.'" (Rev Ed 156). When it is put like this ... it just sounds so easy. When in practice doing this for a prolonged period of time is both humbling and a time consuming affair to only underperform the market. I went from beating the market by a solid 20% in my one actively managed account to finish 2020 to buying all the dips on $PBW and epically underperforming "The Market" by Spring of 2021 🤔 ... got greedy and got burnt! "There is no reason at all for thinking that the average intelligent investor, even with much devoted effort, can derive better results over the years from the purchase of growth stocks than the investment companies specializing in this area. Surely these organizations have more brains and better research facilities at their disposal than you. Consequently we should advise against the usual type of growth-stock commitment for the enterprising investor." (Rev Ed 159). Well now I feel less bad about being a 💩growth stock picker ... I'll probably keep my base portfolio in $VT , $FDIS , $FTEC , and $FCOM . I try and limit myself to 10% fun stuff so that if I swing and miss that I don't underperform the market too poorly. "The key requirement here is that the enterprising investor concentrate on the larger companies that are going through a period of unpopularity. While small companies may also be undervalued for similar reasons, and in many cases may later increase their earnings and share price, they entail the risk of a definitive loss of profitability and also of protracted neglect by the market in spite of better earnings. The large companies thus have a double advantage over the others. First, they have the resources in capital and brain power to carry them through adversity and back to a satisfactory earnings base. Second, the market is likely to respond with reasonable speed to any improvement shown." (Rev Ed 163) When I read this one, my mind was immediately drawn to $JNJ especially after the opiod epidemic settlement; however, on second reading I'm starting to think of $XOM or maybe that was just because I saw @Quinnfos94 's post on #PublicTravel . If oil companies can pivot into clean energy ... might be a great investment in a relatively unpopulary large company. "An important new factor in recent years has been the acquisition of smaller companies by larger ones, usually as part of a diversification program. In these cases the consideration paid has almost always been relatively generous, and much in excess of the bargain levels existing not long before." (Rev Ed p173) Reading this one again makes me think of @financepillowtalk and her post on $AMZN buying $AFRM - be sure to check her post out here - https://public.com/p/SzEbfuSsv0JVKd3xkE2D5BDOT7AdxSYt . So update - I misread and apparently it is a partnership and not acquiring. So I will leave this pending $AMZN acquisition in its place w/ MGM - https://www.hollywoodreporter.com/business/business-news/amazon-mgm-labor-coalition-lobby-1234995698/ P.S.: "As an investor you cannot soundly become 'half a businessman,' expecting thereby to achieve half the normal rate of business profits on your funds. It follows from this reasoning that the majority of security owners should elect the defensive classification. They do not have the time, or the determination, or the mental equipment to embark upon investing as a quasi-business. They should therefore be satsified with the excellent return now obtainable from a defensive portfolio (and with even less), and they should stoutly resist the recurrent temptation to increase this return by deviating into other paths." #SundaySchool #FeedYourBrain #StayHumble

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