To “Stay the Course” is more than just time in the market. When investors hear the phrase “stay the course”, it often centres around the idea that time in the market is better than timing the market. I agree with this. However, when I am discussing the idea of staying the course it is about… Continue reading
To form your Investment Philosophy, you need a general idea about what Investment Risk is and what your tolerance towards it is. Once investors understand the types of risks involved, they can shape their investment process and overall portfolio to suit their appetite. TABLE OF CONTENTS: What is Risk Vs Return? The definition of Investment… Continue reading
Understanding your circle of competence is important as it can help you make better investment decisions perhaps with an edge over other investors. A circle of competence is a mental model concept that aligns the investor’s skills, expertise, curiosity, and passion. TABLE OF CONTENTS: What is a circle of competence? All investors have heard of… Continue reading
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
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
The Weighted Average Cost of Capital (WACC) is a crucial financial metric that investors use to determine the value of a company’s combined pool of capital, debt and equity. TABLE OF CONTENTS: The Weighted Average Cost of Capital explained. The WACC is the average rate at which a company can expect to finance its business… Continue reading
The Capital Asset Pricing Model (CAPM) is a way to measure the cost of equity of a firm and the expected returns from an investment. TABLE OF CONTENTS: The Capital Asset Pricing Model explained. Investments come with risk, the higher the return the higher the risk. The CAPM model helps establish the relationship between the… Continue reading
