Wednesday, March 4, 2015

"Whitebox Investment Principles: Ten Enduring Principles to Interpret Constant Market Change"

From Whitebox, I really like these principles:

  1. The source of investment return is the efficient reduction of risk.
  2. Know the drivers of your investment; maximize exposure to the mispricing and minimize exposure to everything else.
  3. Right or wrong, the market always has a message; listen critically.
  4. Ask yourself THE 4 QUESTIONS: How large is the apparent mispricing?; What is your level of confidence in the mispricing?; What is the most efficient hedge?; What is your level of confidence in the hedge?
  5. Focus one level below the obvious.
  6. See a lot, be a generalist. Be security agnostic.
  7. Be more invested at the bottom than the top. If more things can go wrong than can go right, you are too close to the top.
  8. Surprise is the enemy of thought; plan for volatile scenarios before they occur.
  9. Avoid strategies that might overwhelm your abilities—or sensibilities.
  10. The most dangerous mistake is the one you miss because it hasn’t lost any money—yet.


whydibuy said...

What a load of gibberish.

" the market has a message. listen critically". What is that nonsense about? There is no message. Mr Market is happy at times and demands a high price for his shares ( the example Buffett uses ) and other times he is dour and gloomy and is willing to sell his shares cheaply.

"Buy more at the bottom and less at the top" Now you tell me. After all these years the secrets to investing success are revealed. Gosh, darn, I never seem to get that message telling me when the top is in or the bottom for that matter. I wonder if the coal guys are at the bottom ? Maybe this Whitebox guy can tell us so we can buy more here at the bottom than we did at the top. And since he knows this stuff, I can conclude that he is one, rich , SOB. I mean, if he knows tops and bottoms, hes got the market down cold.

Nothing like bringing some levity on the blog with this claptrap from Whitebox.

CP said...