Author Topic: I have given up value investing  (Read 21869 times)

muscleman

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I have given up value investing
« on: January 16, 2019, 08:43:23 AM »
I started learning value investing since 2009 and was lucky to make some money during this great bull market, though I am probably not beating the market.
I have decided to give up value investing because it doesn't fit my personality.
There are several flaws that's probably most likely related to my personality.
1. I always over analyze and paralyze. Fear to buy. (Could this go down more?) Fear to sell. (Could this go up more?)
2. My analysis has serious flaws and later earnings turn out to be bad and it turned out that if I know more about it and do more research, I could have figured it out and avoided it. (Rear view mirror always clearer)
3. Too nervous and keep checking the stock price. When it goes against me deeply, I feel depressed and can't concentrate on work or family anymore.
4. I have always thought if I started investing in 2007, how would I fair in 2008-2009 crash. I have no answers. I know friends who lost 75% in that bear market and felt distress from both self and family, but eventually made back and more after 2009. Can I psychologically withstand that? I don't think I can.

There are more ways to make money than value investing. I am currently exploring those.

Update: I never expected so many replies and a lot of them with misunderstandings of my post.

As John pointed out:
Post by muscleman of January 5th 2019 in the CoBF members 2018 returns topic:

I had the same feeling in 2017 when my baby was born. I was sleeping 4 hours a night for many months and felt like a drunk. I have now switched to a technical heavy approach because in general it takes less time. I was lucky to make this decision around May, and was actively learning and liquidating all of my value positions, so I was not affected by the recent down turn. I ended up +10% this year mainly because of BXC and SMLR (4x and 3x).

What I really want to say is this:
There are many ways to make/lose money. Value investor, technical trader, value+technocal combined, quantitative approach etc.
The most important thing to become successful is to find the method that suits your personality! I have been struggling as a value investor with huge emotional up and downs, but after I switched to technical method, I no longer have those ups and downs, and I no longer freeze when I need to pull the trigger.
I am surprised to see some replies here saying value investing is the best method and giving up value investing means playing the field with significant disadvantage. I disagree. The only time when one can win big is when he finds the method that suits him the best. Therefore I am writing this post to share with members of my own experience, and alert struggling members not to treat value investing as the holy grail, and find a method that suits YOU!
« Last Edit: January 17, 2019, 03:01:21 PM by muscleman »
I am muslceman. I have more muscle than brain!


Liberty

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Re: I have given up value investing
« Reply #1 on: January 16, 2019, 09:00:50 AM »
Congrats, that sounds like an honest self-assessment, which is actually a very important skill to have as an investor (necessary though not sufficient).

This line of work certainly isn't for everyone, like many other technical and stressful jobs (any surgeons in the house?).

What kind of other things are you looking at? Completely different, or similar occupations?

Good luck (and hard work) in whatever you do next.
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petec

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Re: I have given up value investing
« Reply #2 on: January 16, 2019, 09:05:38 AM »
Congrats, that sounds like an honest self-assessment, which is actually a very important skill to have as an investor (necessary though not sufficient).
Quote

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nickenumbers

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Re: I have given up value investing
« Reply #3 on: January 16, 2019, 09:45:22 AM »
Muscleman, I think that you shared something that most of us have thought/feared/wondered ourselves..  [Even if only for a short while.]

C. Munger often retells the story of the musician that came to Mozart and asked how he may also become a composer like Mozart.  Mozart had been creating amazing work even in his teens.  Mozart and Munger both conclude that not everyone has the same gifts.  In Virginia we say "Ya can't push a square block into a round hole."

And, THAT IS OKAY.  Enjoyment with your family, your friends and yourself is the most important.  How you finance your lifestyle is secondary.

Muscleman, I bestow you an A+ for self-awareness and honesty!  The jury is still out on the rest of us, either we are going to create Alpha, or we are pissing into the wind!

« Last Edit: January 16, 2019, 09:52:22 AM by nickenumbers »
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LC

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Re: I have given up value investing
« Reply #4 on: January 16, 2019, 09:49:01 AM »
Good luck on whichever path you venture down!  ;D

Also, there's nothing wrong with indexing and going to the beach!
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DocSnowball

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Re: I have given up value investing
« Reply #5 on: January 16, 2019, 10:04:53 AM »
GLTY - maybe there is a time for indexing and a time for value and that is something I think about which keeps me going as an active investor

Prof. here talks about "returns per unit of stress" which made an impact on my thinking
https://fundooprofessor.wordpress.com/2012/04/05/returns-per-unit-of-stress/

When indexes are clearly undervalued or at least fairly valued (like in EM indexes IMHO) I'm happy to index as well now. Too much stress in a 100% active portfolio. As an individual investor with a life, I find it difficult to cultivate more than 5-10 ideas that are honestly within my circle of competence. When they are within it, it doesn't feel like work, and is fun despite the high beta. Also, the last few years have been about disconfirming so many thesis, it is tiring turning over one rock after another and not finding it worth investing. Maybe wiser ones on this thread will comment on how many years or units of learning it takes to be able to manage a full portfolio with lower levels of stress and returns that are consistently positive above inflation


cherzeca

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Re: I have given up value investing
« Reply #6 on: January 16, 2019, 10:05:08 AM »
Good luck on whichever path you venture down!  ;D

Also, there's nothing wrong with indexing and going to the beach!

imo, indexing should be good for a large majority of your portfolio.  only where I "think I have an edge" should I get specific names into portfolio, and those circumstances are relatively few.  and these are almost by definition cases where I disagree with the market, so fear and uncertainty comes with the territory. the true pros seem to me to be .330 hitters, great in baseball and also great in investing if you manage risk and strive for survival above all else (taleb)

John Hjorth

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Re: I have given up value investing
« Reply #7 on: January 16, 2019, 10:10:01 AM »
Post by muscleman of January 5th 2019 in the CoBF members 2018 returns topic:

I had the same feeling in 2017 when my baby was born. I was sleeping 4 hours a night for many months and felt like a drunk. I have now switched to a technical heavy approach because in general it takes less time. I was lucky to make this decision around May, and was actively learning and liquidating all of my value positions, so I was not affected by the recent down turn. I ended up +10% this year mainly because of BXC and SMLR (4x and 3x).
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Gregmal

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Re: I have given up value investing
« Reply #8 on: January 16, 2019, 10:16:31 AM »
Well, to provide you with some modest pushback, very few of the things you listed, actually have anything to do with value investing specifically. They could apply to any strategy and deal more or less with your own temperament when it comes to handling draw-downs. Investing isnt life though, so if it takes up an excessively large portion of your mental space, and you are not comfortable with this, then I applaud you deciding to cut ties.

no_free_lunch

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Re: I have given up value investing
« Reply #9 on: January 16, 2019, 10:20:52 AM »
I agree with the others, index and then invest when you find something in your area of competence.

What are the other ways to invest?

My experience in 08/09 was I wasn't worried about the quality stocks in my portfolio.   I was scared about the lower quality stuff and I was scared about the ideas where I was just following someone.   So just make sure you understand your ideas (same advice applies to me).   This is why I now have  stuff that I think is quality (ok maybe 1 or 2 exceptions) and then etfs.  I am comfortable with both, I was comfortable with both on dec 24.
« Last Edit: January 16, 2019, 10:22:50 AM by no_free_lunch »