There are three massive problems for both new and experienced investors today.
I’ll start with #1:
Have you ever read an article about “how to invest in the stock market”? I have. When I was first starting, I read them all — or at least any I could get my hands on. The blog article would read like this:
Read Benjamin Graham’s Intelligent Investor and then read Warren Buffett’s letters.” ― Investing Blog
[ Picture a montage of Rocky training for his next fight, or in this case, Leo reading a new investing book ]
As I finished the sage advice, my once extreme excitement turned sour as I hit the proverbial brick wall. Where do I go from here?
So that’s problem #1:
Investing resources tell you where to go, but they rarely give you step-by-step guidance on how to get there!
Problem #1 may provide insight into why problem #2 exists. And that leads me to problem #2:
90% of investors have no idea what the heck they are doing!
Want proof? The S&P index beats the majority of professional money managers.
Read that again and let it sink in…
That’s like paying a plumber to fix a leaky pipe, making the leak worse, and then handing you a hefty invoice on their way out the door and getting paid to make things worse? That’s insane!
Want more proof?
At an investing conference recently, a prominent hedge fund manager stated that every stock looks expensive. I asked him the yardstick he used, and he said he’ll only buy at a 12x multiple.
Without going into the details on why a multiple will adjust due to risk-free rates or which multiple he was talking about, it was clear that this person didn’t have a solid fundamental background in the technical details of valuation — although I admire the price discipline.
And problem #3, investors need to broaden their toolset. We’re in the information age. Why are you not using computers to help make your investment decisions? I don’t mean just using a screener; I mean having computers analyze what, when and how much to trade.
So you want to learn how to invest or improve your performance in the market ?
As promised, here’s something actionable: You could quit your job as I did to study the stock market, investing and valuation, statistics, and quantitative methods 24/7/365, or you could keep your day job and read this Blog. With that being said and without further ado:
Welcome to Analyzing Alpha
A blog that helps both new and experienced investors beat the market by getting to the truth of what works and what doesn’t… all without quitting their day job ;).