Author Topic: Thorts  (Read 218 times)

galumay

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Thorts
« on: March 04, 2023, 11:50:04 AM »
I percieve risk as all the things that can happen that lead to a bad outcome, there are infinite things that can happen and there is no way of imagining all the things tha might happen. (risk & opportunity are the mirror of each other.)

Everytime we have a capital loss our tendency is to try to analysis what we did wrong and seek to avoid it in the future. Thats all well and good but I suspect a lot of the time something happened that we didnt expect, had no precedent for and its just what happened, no more no less.

I was thinking about this in the light of our holdings in PPH, a business that recieved a takeover offer thru a Scheme of Arrangement, the BoD and Management resolved the offer was more than fair, they all supported it, and by extension, no longer wanted to run the business. - not exactly the sort of people you want running your continuing business. So on the basis of that information I voted in support of the SoA.

To my amazement a significant amount of shareholders voted against the SoA - enough for it to fail! So the extraordinary situation is the Shareholders have destroyed capital in a meaningful and deliberate manner, BoD & Management are forced to continue running a business they no longer wanted to and shareholders like me have been victims of risk - one of all of the bad things that can happen!

The point is that in my thesis for investment in this business, and every other business I have invested in, I never perceived of a risk of Shareholders being the ones capable of, and willing to destroy capital.

In investing I suspect there is almost never an edge in writing long winded theses, pretending that you have assessed the downside, we certainly know there is no edge in intelligence. Almost no one beats the market in the long term, yet there are millions of us convinced that we are part of the 5% that end up successful active investors! Its like the old joke that 90% of men think they are better than average drivers!

I suspect that luck, both good and bad is nearly everything, from there temperament is probably the single greatest potential advantage you can have as an investor, along with rationality and the delayed gratification gene.

Humilty is important too, given our starting point is the over riding arrogance and over confidence of believing we can consistently beat the market over the long term,

Rationality is huge, again if asked most people will say they believe they are rational, yet the evidence is all around us that this is not true. Nearly half the humans are religious, believing in a culture specific sky fairy is not rational, billions believe in astrology, homeopathy, chirapractics and many bizarre conspiracy theories. Humans by and by are anything but rational, so if you truly are I think its a great advantage in levering luck/risk/all the infinite things that can happen.

The extension of these thoughts is that we should not be studying what the great investors do, but rather how they do it in terms of temperament. Quite diverse processes can work, compare Buffett to Lynch as an example, but what they have in common is humility, rationality, integrity and

« Last Edit: March 05, 2023, 09:38:34 AM by galumay »