Mean reversion is a financial theory suggesting that asset prices and returns eventually return back to the long-run mean or average of the entire dataset.Nice add of “relative to their long-term averages”.
andt's like people want to make it more complicated picking individual shares or timing the market
are aimed at people like me who like to buy real shares in real businesses rather than simply invest in an index tracker.I think if people are investing in stock market and messing around to much they should go try something else like selling on amazon or trading Betfair
I presume that you're asking what happens when I get too old to manage my investments actively. Firstly, as you've probably gathered from my updates to date, I have a buy and hold approach with my key holdings. I don't envisage making many changes in future either. Also, I have contingency plans in case anything happens to me, so that someone I trust will take over decision-making. If all comes to all, the money can be put into an index tracker: I agree with @Fella that this is the best approach for someone who just wants an investment that will deliver results in the long-term, without wanting to look under the bonnet.are you at all concerned that the day may eventually come when you won't be able to follow what's going on at the races?
My next of kin have seen the results over many years; in fact, the diary started a number of years ago as my way of explaining to my nearest and dearest what I was at. She knows nothing about the stock market, but she knows the main companies I've invested in and she knows why I'm invested in them (thanks to the diary). That gives her more peace of mind than if our money was in some faceless fund.does your next of kin share your enthusiasm for attending race meetings?
I take your point. I recall when I started investing first, I had share certs stuck in boxes, which I was likely to mislay, etc. Now, I don't hold any share certs and none of the dividends etc. come directly to me (they couldn't anyway for my ARF and AMRF holdings); all my accounts are with recognised providers and I hope there would be relatively little bother if I were to cock my clogs.A few years ago I had to help sort out a portfolio of individual stocks for an elderly relative
@Fella, you're in danger of attributing God-like qualities to "the market". Don't. You like quoting Warren Buffett. Well, you should take heed of another of his quotes: "Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence."I don't believe its possible to beat a liquid market , buying Apple or short Telsa in the opinion you know more than the market imo is crazy , by all means buy Apple or short Telsa but understand that whenever you do so you are buying or selling at a fair value and you have no advantage over the market.
Whilst I agree with you that for the vast majority of investors a tracker is the most suitable investment, I struggle to understand why those who do pick individual shares are rubbished so enthusiastically by those who don't. It does not seem to happen with any other asset class when somebody uses their opinion/knowledge/expertise to inform their investment decisions.I would bet money that a random selection of n shares picked by a monkey would perform as well as your top n shares over any given time period if I was getting odds above evens.
My opinion is you have beaten the market through luck and no skill , I don't believe its possible to beat a liquid market , buying Apple or short Telsa in the opinion you know more than the market imo is crazy , by all means buy Apple or short Telsa but understand that whenever you do so you are buying or selling at a fair value and you have no advantage over the market. I don't think its possible to tell if someone is lucky or unlucky even in a lifetime of investing with a small amount of holdings like you have.
I kind of agree with you.He was insane. Just because it worked out, it doesn’t mean he was right to do it.
It was the size of the position that was particularly crazy.I kind of agree with you.
But essentially that means I think that somebody was incorrect to trust his own judgement on something he was particularly well informed about, in favour of trusting the judgement of a third party on something he knew nothing about.
That seems counterintuitive!
Thank you spanners. You've articulated my thinking perfectly.I struggle to understand why those who do pick individual shares are rubbished so enthusiastically by those who don't. It does not seem to happen with any other asset class when somebody uses their opinion/knowledge/expertise to inform their investment decisions.
I'd look at him as if he had two heads.I would bet money that a random selection of n shares/houses picked by a monkey would perform as well as your top n shares/houses over any given time period if I was getting odds above evens
Betfair trading is the same as the stock market its 100% book and you only lose money on the spread and the commissions , I am not really explaining myself very well but basically what I am saying is taking any position on Betfair you would expect to return long term negative to the tune of the spread and commissions its very hard to beat Betfair and only a tiny % do and I am not sure if they are lucky or skilled.@Fella
In reply, I'll quote from the very first sentence of my very first column, dated 6 September 2015:
"The broadcaster George Hook reckons buying shares is a form of gambling: “I don’t back horses and so I don’t buy shares”. Hook is wrong. There is a fundamental difference between the two. The average gambler may hit the occasional lucky streak but is a sure loser in the long-run, whilst the average share buyer should make a profit, provided they have a reasonable spread of investments and a sufficiently long investment horizon."