Mental Models discussed in this podcast:
- Concentration vs Diversification
- Expected Value
- Probabilistic Thinking
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You can find out more information by listening to episode 11 of this podcast.
Show Outline
Not every stock is right for every Value Investor
- Just because a company is cheap doesn’t mean you should own it
- You need to learn to recognize the types of stocks that appeal to you and your strategy, while at the same time ignoring those stocks which don’t work for your strategy.
Focus Areas to Discuss:
- Deep Value Stocks
- Quality Stocks
- Momentum Stocks
- Growth Stocks
- Concentrated vs Diversified Portfolios
Summary:
Portfolio management is a critical means by which an investor implements their investing strategy. Everything flows from your portfolio decisions: including returns, risk, and your general feeling and emotions of investing. Therefore, it is critical to align your portfolio and stock selection with your chosen strategy. Concentrated investors should not be buying deep value stocks. By the same token, diversified portfolios are better able to incorporate coin flip stocks with binary potential and high expected value. Don’t make the mistake of building a diversified portfolio with stocks that fit a concentrated portfolio and vice versa.
