Im not into RE (pretty much ignored it becauce of the record low rates that can only head in the wrong direction - maybe not valid) but i read youre posts with high pleasure. And just like you mentioned i saw the upside abit to low to get blood taste enough to do the ground work. Allways thought i had atleast an equal good idea but with the advantage that i could hold on to it for a longer timeperiod to decrease the reinvestment risk. I´ve allways been thinking that i may pull of something like this if i worked my ass of as long as the market remains positive but i´ll probably loose more in short term plays than i would in my other investments when the shit hits the fan. Not as comfortable holding on to it, maybe not as high underlying resiliens as long picks, alternatives look more appeling etc - so to summarize, in my head it takes more work and probably larger losses in downmarkets, which makes it a sub strategy to my regular once. You write that you feel fine holding on to these long term as a back door so i asume you don´t make the same conclusion about large losses for whatever reason - not necessarily a universal right or wrong here, may be individual aswell.
I only let a play develop into a long-term holding on the basis of it actually working, i.e. the share price going up *and* the fundamentals improving. Both, not one or the other. Also, it allows time for me to really familiarize myself with the business and sector in a manner not quite possible before the decision to invest. This is a way of avoiding to water the weeds and also something of a check on reinvestment risk; the idea being that this would select me into better businesses on average.
I wouldnt be suprised if you pulled it of. Anyway, fun with somethin "out of the box" - not so much new thinking after a couple of years in this game. So, i read that as you use a "stoploss", but with time instead of percentage decline. The most intresting things here lay on the side when it doesnt work - would be great to read more about that but i understand if you don´t want to give away that info.
Not anything secret in it. Either it busts and there is a loss or I earn the spread, or whatever appreciation I get from the immediate situation, or I get bought out. The important part is that I can't allow the thesis drift if price is not moving my way, because the price action could be a major indication that I have been wrong in some important fundamental aspect.
It's not a very innovative idea. Ben Graham talked about selling after 2 years no matter the price if the stock has not gone up. This as a way to root out the terminal losers. Special situations tend to work on a somewhat shorter, and variable, timeframe, but the reasoning is basically the same.
Another inspiration is John Hempton's "bearded value guys" who are always convinced that they are right no matter how badly the stock performs. Contrarianism is necessary for good stock picking but likely not sufficient.
Im not into RE (pretty much ignored it becauce of the record low rates that can only head in the wrong direction - maybe not valid) but i read youre posts with high pleasure. And just like you mentioned i saw the upside abit to low to get blood taste enough to do the ground work. Allways thought i had atleast an equal good idea but with the advantage that i could hold on to it for a longer timeperiod to decrease the reinvestment risk. I´ve allways been thinking that i may pull of something like this if i worked my ass of as long as the market remains positive but i´ll probably loose more in short term plays than i would in my other investments when the shit hits the fan. Not as comfortable holding on to it, maybe not as high underlying resiliens as long picks, alternatives look more appeling etc - so to summarize, in my head it takes more work and probably larger losses in downmarkets, which makes it a sub strategy to my regular once. You write that you feel fine holding on to these long term as a back door so i asume you don´t make the same conclusion about large losses for whatever reason - not necessarily a universal right or wrong here, may be individual aswell.
I only let a play develop into a long-term holding on the basis of it actually working, i.e. the share price going up *and* the fundamentals improving. Both, not one or the other. Also, it allows time for me to really familiarize myself with the business and sector in a manner not quite possible before the decision to invest. This is a way of avoiding to water the weeds and also something of a check on reinvestment risk; the idea being that this would select me into better businesses on average.
Each to their own, if it works it works.
I wouldnt be suprised if you pulled it of. Anyway, fun with somethin "out of the box" - not so much new thinking after a couple of years in this game. So, i read that as you use a "stoploss", but with time instead of percentage decline. The most intresting things here lay on the side when it doesnt work - would be great to read more about that but i understand if you don´t want to give away that info.
Not anything secret in it. Either it busts and there is a loss or I earn the spread, or whatever appreciation I get from the immediate situation, or I get bought out. The important part is that I can't allow the thesis drift if price is not moving my way, because the price action could be a major indication that I have been wrong in some important fundamental aspect.
It's not a very innovative idea. Ben Graham talked about selling after 2 years no matter the price if the stock has not gone up. This as a way to root out the terminal losers. Special situations tend to work on a somewhat shorter, and variable, timeframe, but the reasoning is basically the same.
Another inspiration is John Hempton's "bearded value guys" who are always convinced that they are right no matter how badly the stock performs. Contrarianism is necessary for good stock picking but likely not sufficient.