Sunday, 19 February 2017

Cherries and Apple

Tobias B commented on my Amateur Hour post, writing:

Thanks for the encouraging words! Did some more thinking on the subject, and concluded that the "low cost" advantage we part timers have over the syndicates is our huge asset and therefore should be handled with biggest possible care. I cant even image the amount they need to turn and the roi they need to produce to finance courtsiders, analyst, tools and more. Puahhh! / Tobias
I always like to be encouraging when there is some merit in the idea or thoughts being expressed. Taking up trading tennis or horse-racing makes no sense for reasons clearly laid out many times in this blog, but Tobias' approach of specialising, keeping costs low and not seeking an unsustainable ROI all make sense to me.

Thinking that your part-time, one-man activity can realistically compete with the resources we know are out there, just doesn't make sense. Syndicates are not flying court-siders around the world for fun. Companies such as Starlizard aren't charities. 

The big advantage part-timers have is that they don't have to get involved all the time - they can cherry pick, rather than be picked off.   

On the importance of specialisation, others have written about this in the past:
An initial mistake I made was to get involved in too many different markets too quickly – looking back I cringe at how I thought I could trade well on completely different sports! This is possible after time but it was a totally unrealistic expectation considering I was a rookie! Luckily I realised this early on and decided to concentrate on researching 2/3 sports. ‘Specialising’ was definitely the key word - Mark Iverson 2007
This blog has recently taken an interest in Apple's stock price, and at 135.72 our Canadian Apple stock specialist is in a world of hurt.

The truth is that as much as he studied Apple, he wasn't an expert. His mistake was irrationally believing that he knew more than the market.

Speaking of Apple, and this headline today caught my eye:
Apple Is on a Crash Course to Being First Company to Ever Be Worth $1 TRILLION
I was a little surprised, given that the headline implied this valuation is somewhat imminent, but of course it is still a long way off as the first line of the article says:
Apple's (AAPL) market cap is surprisingly only 40% away or so from reaching $1 trillion.
Only 40% away from. I suppose a headline of  "Apple Is A Little Over Halfway to Being First Company to Ever Be Worth $1 TRILLION" isn't quite so dramatic. 

Rather sadly perhaps, but I keep track of actual versus targets for various assets, but usually only watch a target that is either within 10% of the current value or that will be reached within a year. When the target is reached, I move it up to the next level, but constantly hitting targets is psychologically important for me.
I've found that one of the things with goals and targets is that they need to be small. You can have a long-term goal of course, but you need to break it down into smaller sub-goals for it to be effective.
What gets measured, gets done - Peter Drucker 
If you set your goal to have a net worth of £1 million by age 60, you're far more likely to achieve your goal by breaking it down into smaller incremental goals than without them - although this won't help you if you are 59, unemployed and with a net worth of 50p. 

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