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Knowledge Compounding: Why it is better to be foolish at the start than at the finish

 

We are probably at the fourth stage of the market where being in the quality stocks is curse, they are no longer producing returns because they are fully discovered. Investors are now bidding for low quality, unloved, undiscovered stocks.

This marks the phase of the market where investors begin to compromise on quality and the fundamental principles of investing in favor of chasing the next big stock. 


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 Wisdom Tree: Do not lose money

In investing not losing money is key and it has been emphasized by Graham in the form of margin of safety and later on by Warren Buffett, who once said that the successful investing is, "Rule No.1 is never lose money. Rule No.2 is never forget rule number one."   

You can still generate higher returns without taking lot of risk, the key is…

 

  • Adhering to quality
  • Establishing the right processes and checklists for identifying exceptional companies,
  • Employing the margin of safety strategy
  • Selecting investments with the potential for compounding
  • And addressing behavioral biases.

 


 

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