The results of returns are often heavily influenced by patience. A patient investor can navigate the complexities of the market while remaining disciplined and calm for long durations of time. Impatience is a characteristic that is lacking in the markets. I believe if investors cultivated the virtue of patience, they would be able to combat negative behaviours and achieve their long-term goals.
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Investment Discipline is a crucial aspect of investing that occurs after an investor has laid out their Investment Philosophy. It involves several factors, such as the investing strategy, Risk Tolerance, asset mix, and a refined investing process. Once the plan is in place, all investors need to exercise Discipline to see their objectives achieved. Discipline… Continue reading
What is 1st and 2nd-Order Thinking? 1st and 2nd-order thinking are thought processes that we go through when analysing situations in all aspects of life. 1st Order thinking is not inherently bad, but it is essential to try to think better and apply Second Order thinking when necessary. The Second Order thought process requires energy,… Continue reading
What are behavioural biases? Investor biases can be categorized into two types, cognitive or emotional. These biases are irrational thoughts and feelings that affect our decision-making, whether subconsciously or consciously. An investor can have one or multiple biases that lead to misjudgments. Recognising our behaviours and biases is essential to becoming a better investor, but… Continue reading
Ignoring the noise can be difficult in the world of investing. However, it’s important to remember that no one else has your exact investment strategy, timeframe, and goals in mind. You are the only one who truly cares about your long-term wealth creation and financial objectives. Don’t give up your independence and decision-making power to… Continue reading
It’s important to know your behaviour and emotional responses towards money in order to invest successfully. Improving your investment philosophy and investment processes can help eliminate irrational thinking. However, there are a few other areas that can help you recognise your behaviour and how to overcome it. The first step is to be aware of… Continue reading
The Psychology of Investing explained. The Psychology of Investing is the study of how emotional and mental influences affect an investor’s decision-making process. This includes what the investor believes, how they act and interact with the markets, and how they respond to different market cycles. Many investors do not consider the impact that psychology has… Continue reading
The Shareholder Yield Explained. The Shareholder Yield is a metric that measures how a company rewards its shareholders through three ways. Issuing dividends, conducting share buybacks, or reducing the company’s debt. This formula helps in evaluating how effectively a company distributes its resources, which ultimately benefits its shareholders. When analysing distributions, shareholders usually focus on… Continue reading
Terminal Value (TV) is a significant metric used by investors and finance professionals to determine the long-term value of a company. The Terminal Growth Rate is the estimated pace at which a company is expected to grow beyond the forecast period. TABLE OF CONTENTS: The Terminal Value explained. In valuation theory, a company’s value equals… Continue reading
Investment and financial markets frequently use the terms “Chasing Alpha” and “Market Beta”. Although they may seem like complicated financial concepts, all investors should understand how Alpha and Beta function in the investment world. Alpha and Beta are often used as measures to evaluate the performance and risk of an investment portfolio or an individual… Continue reading
