Page 39 - DIY Investor Magazine - May 2019

‘BY APPLYING SOME VERY SIMPLE RULES ABOUT HOW YOU ASSESS THE PROSPECTS FOR A COMPANY AND SPREADING YOUR RISK, YOU MAY JUST FIND THAT ‘TENBAGGER’’
Such an approach may be heresy to fundamental investors who will be equally convinced that the answer will be there in a spreadsheet, it is just a matter of teasing out that additional value and making a killing.
By investing in individual equities you are, by definition seeking that market beating performance; a FTSE 100 tracker would give you exposure to the performance of the index at a cost of 0.07% annual management fee, but that’s not enough.
So, equity investing can be something of a roller coaster, but hopefully by applying some very simple rules about how you assess the prospects for a company and spreading your risk, you may just find that ‘tenbagger’. Ediston Property (which we manage) – are able to try to avoid them.
Elsewhere on DIY Investor you will see a company called Heckyl introducing the concept of sentiment analysis whereby a whole range of non-financial events can be demonstrated to have an effect on share prices and
for every mathematician that claims to have found ‘the’ formula, there will be someone who has beaten the market because he received a message through his coffee grounds or met a thoroughly decent chap in a wine bar.
By definition, to have a market, you have to have winners and losers; if outperforming the index is the Holy Grail and there was a proven way of achieving it, everyone would be doing it!
Active fund managers look to beat the market with
their superior investment strategy and insight, whereas passive managers believe that solid performance can deliver greater returns when coupled with ultra low costs; then there are active, passive funds that use complex formulae to try to unlock that elusive latent value.
Elsewhere on DIY Investor we look at a technique called momentum investing as propounded by Saltydoginvestor which contends that investors will join the crowd
when they identify a trend – rising or falling – thereby exacerbating it.
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39 DIY Investor Magazine | May 2019