Over the weekend, I got the chance to watch “The China Hustle”, a financial documentary by Jed Rothstein. The documentary explores the sinister nature of Chinese companies reverse takeover into US stock exchanges.
The “Hustle” part of the title refers to the fraudulent nature of many of the listings. It explored patterns of faked numbers, technologies and facilities. The documentary shows the journey of sceptical short sellers to uncovering the misconduct and profit from them.
Howard Marks’ latest memo came out yesterday. It was insightful and objective.
The usual stuff.
In the memo, he mentioned that he was writing a book about cycles. I am eagerly waiting for that book to come out.
There was another Howard Marks’ memo that I re-read from time to time, which was also about cycles. It is titled “You Can’t Predict. You Can Prepare.” It was written in Nov 2001, when the US experienced its first recession since 1991.
In this post I will liberally take excerpts from the 2001 memo.
It’s mostly a reminder for myself the inevitability of cycles amidst the current environment. Continue reading
Scale. It’s a fickle thing. All companies want to harness its absolute potential, yet only a few really are able to fully utilise it. Every company who made the jump from a microcap used it. It is one of the oldest theory in economics, yet many microcap investors overlooks it. One aspect particularly overlooked is when a company is sub-scale. Continue reading
“Risk means more things can happen than will happen.” Elroy Dimson
One of the most important lessons that I had early on in my investing experience is that it is more productive and profitable to think in probabilities, rather than absolutes. Unfortunately, it is a lesson that I sometimes need to re-learn. What I mean by that is thinking through the buying decision not as “is this stock definitely undervalued?” or “is this stock going to double?”, but rather as “is it more likely than not to be undervalued?” or “is the business more likely to be better in the future than it is now?” It is a subtle difference, but it re-focused my emphasis on not just the upside potential, but on the downside risk. Continue reading
Jumbo Interactive (ASX:JIN) is an Australian online lottery seller. It has a simple enough business model, yet it was the complete opposite of BPF in terms of its moat and the impact to my portfolio. It is (still) one of my best investments. The reason why it was misjudged by the market was due to 2 main reasons: internal short-term woes AND a misunderstanding of the strength of its business model.