Five Principles for Investing and EPG

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Cliff_N
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Five Principles for Investing and EPG

Post by Cliff_N »

Reading a good book that covers Five Principles in detail. Dan Steffens and EPG do a great job of enabling #1 while providing great information for 2-5:

(1) make decisions rationally,
(2) invest in what we know,
(3) work with honest and trustworthy managers,
(4) avoid businesses prone to obsolescence and financial ruin, and
(5) value stocks properly.

Reference: Tillinghast, Joel. Big Money Thinks Small: Biases, Blind Spots, and Smarter Investing (Columbia Business School Publishing) (p. 3). Columbia University Press.
dan_s
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Re: Five Principles for Investing and EPG

Post by dan_s »

Cliff;

Thanks for posting this good advice.

My "job" is to find companies that are profitable and have the potential for much higher share prices. They don't all reach their potential, but if we can avoid a Major Recession, I think most of our model portfolio companies do have a lot of upside. IMO they are all trading at deep discounts to reasonable valuations.

One rule that I might add is to be patient. I usually follow a company for at least a year before considering it as an addition to one of our portfolio. That has caused me to few good opportunities.
Dan Steffens
Energy Prospectus Group
Cliff_N
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Re: Five Principles for Investing and EPG

Post by Cliff_N »

Good add. I held CPE for two years before selling a 1/3rd of our shares. As you know, a big difference between gambling, speculation and investing. By using the word "patience," I believe you are advocating for "investing." An investor takes profits when the predicted opportunity surfaces.
Fraser921
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Re: Five Principles for Investing and EPG

Post by Fraser921 »

Very key in my book

>(5) value stocks properly >> Some people miss the mark here

When the thesis doesn't play out people then say have patience. When the thesis changes , you have to move before the herd does. ie .. No patience.
Cliff_N
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Re: Five Principles for Investing and EPG

Post by Cliff_N »

Another good point Fraser, when the theory is changed, then we must change. As Einstein noted, "It only takes a data point of one for me to throw out or revise my theory." Adaptation is critical.
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