The two most destructive things for investors are information overload and cognitive bias. Information overload blurs our analysis and cognitive bias affect our psychology not to think and react accordingly. To make it worse, we find almost no investing resources out there that offer articles or insight that fill those gaps. As retail investors, we know this pain. Besides become our notes, the investingdeck.com article will also help investors to build complete insight and psychological intelligence. This is our vision, and this is your reason to stay here.
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In This Issue
In the long run, the investor’s return stems from their analytical skill and psychological intelligence – and luck. The first is not easy, the second is the hardest, the third will smile when you get the first twos. The first, the analytical, will be our starting point.
Turning The Rock
Regarding investing, Peter Lynch said,” he who turns the most rock win.” But don’t let this quote deceive you. Analytical skills aren’t built solely by quantity. Turn the most rock not guarantee the outcomes. You can read more than others but still get less insight.
Advance in technology – especially internet – has created a massive stream of information. Seventy years ago, computers with the internet is not part of our everyday life. Today, the situation is much different. We can watch value investing channels, scroll through financial blogs, or read books about stock market psychology just on our smartphones in our hands. All are Online.
In the past, it is hard to get information. Today, it is too much.
On the flip side, we have limited time, limited budget, and the most crucial: a limited cognitive capacity to digest all that information.
Problem is, most investing resources don’t help the investor to turn the rock in the proper way – some of them only turn “some parts of a rock”, preventing the investor to get complete perspectives: can’t recognize the hidden value, can’t recognize the risk.
So we have quantity problem, as well as quality problem.
Your Investing Resources Should Deal With Analytical Skill: Turning The Rock? How?
Investingdeck.com is sure that the answer to that problem is organized information – or we prefer to call it an information ecosystem, mimicking the approach adopted by many great businesses.
We take Apple as an example. The success of Cupertino’s side – to sell a product with a fat margin in reasonably high volume – is due to its ecosystem. Apple has in-house chips, OS, devices, even has its own retail store.
Another great example is Nvidia. The graphic card maker dominates AI with its ecosystem: Nvidia GPU as “AI server” and Mellanox as “AI communication infrastructure”
Like Apple and Nvidia, we are obsessed with the ecosystem. In our case, it is the ecosystem of content. We compose content that is interconnected to one each other, thus reader could get the wider picture, the deeper understanding. When we are discussing Microsoft, we compile contents that cover its competitive advantage, management, financial performance. We try to cover all blind spots. Like Sherlock, we try to connect the dots – we try to become your Baker Street in your journey to beat Wall Street.
Your Investing Resources Should Deal with Behavioral Skill: Playing Your Card
Knowing something is one thing. Act accordingly with the respect to that knowledge is another thing. The last section has told us that we have a problem with the resource – they are massive, feed you every second, unorganized, and not presented in depth. This section introduces us to another problem: our decision-making.
Perfect, isn’t it? Poor data quality and bias in decision-making.
It is the reason why investing is difficult. Simple, but difficult. Munger warns us, whoever tells you that it is easy, is stupid.
Regardless of the abundance of investing wisdom, books, journal, blogs, that cover psychological facts in investing, people still react to the opposite. Decision-making doesn’t depend on the fact, it is all about how we think.
One theory that could explain this cognitive phenomenon is evolutionary theory. From this perspective, the human brain is well-designed for survival mode. Thus, it works better for the ecosystem a hundred thousand years ago rather than the information age. We are better at sensing the danger of saber-tooth cat’s threat rather than realizing the bubble of the housing market. Investingdeck try to give psychological enhancement via our insight. No, not those kinds of jibber-jabber mental or mindset: “Buy when other fears and sell when other greed” or “If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes”.
We present you with something different.
We provide real-life examples, something that closes to us. Something that happens today – not company 20 years ago.
We will provide possible pitfall or psychological traps for specific cases. By knowing the error we may face, we believe we could make better decisions.
Walking Further
When we begin investing years ago, we find some terms like “fundamental analysis” and “value investing” that turn out to be logically misunderstanding. Terry Smith, one of the brightest investors in his generation, classified valued stock as a company with a low P/E ratio and long reputation. We love Terry’s works, but his definition of value – needs to be revisited. Growth itself is a part of the value – in our perspective. To be complete, a valuable company is a company with a durable economic moat with growth prospects. What Terry means possibly is cheap company.
This definition could mislead some investors, trap them in the dichotomy between value and growth, something that actually similar.
This kind of misconception is the thing that we are hurry to deal with – and we find it a lot out there.
Final Thought
We would like to paraphrase Howard Mark’s quote, “You can’t take the same action -read the same material and analysis (addition from us) – as everyone else and expects to outperform.” Investingdeck.com offers you another perspective.
Welcome to your deck.