Hedging
Over on Seeking Alpha, I received several excellent and important questions. I bring them here, as they are of equal importance to you...
Good morning, John,
Excellent questions; thank you! In fact, each reminds me that I must always address the newer readers who lack familiarity with my earlier posts.
Yes, 30+ stocks replicates an index, and, yes, there is no "edge" to be had there. However, the list is for my readers who have their own investment objectives and risk tolerances: big cap or small cap, growth or value, high price or low price, trending higher or trending lower, and across the wide spectrum of sectors and groups. So I make the list as complete as possible, and thus allow the readers to make their own decisions based on which opportunities resonate for them. I limit my portfolio's holdings to 9 names -- this number has proved optimal in study after study; once long 9 positions, a new position must be arguably compelling as it must displace one already long in my portfolio.
I am not one to shower disrespect on Warren Buffett: he is smarter than me and has more money as well! Nor do I intend to sound dismissive of hedging by terming it a ploy. No, I am a plain vanilla investor: long (only), make money, and when the market is in a mood not to cooperate, take my money and seek balance in my life. That balance expresses itself via my relationships with other people, my incessant travels, and an abiding interest in photography. At those moments -- whether with other people or on the road -- I have nary a care in the world, and find that I pursue the ultimate hedging "ploy" -- living life.
-- David M Gordon / The Deipnosophist
Greetings,And my reply...
Doesn't 30+ stocks start to replicate an index? Where is the edge there?
Also, why do you dismiss hedging as a "ploy"? It works well for Buffett.
Good morning, John,
Excellent questions; thank you! In fact, each reminds me that I must always address the newer readers who lack familiarity with my earlier posts.
Yes, 30+ stocks replicates an index, and, yes, there is no "edge" to be had there. However, the list is for my readers who have their own investment objectives and risk tolerances: big cap or small cap, growth or value, high price or low price, trending higher or trending lower, and across the wide spectrum of sectors and groups. So I make the list as complete as possible, and thus allow the readers to make their own decisions based on which opportunities resonate for them. I limit my portfolio's holdings to 9 names -- this number has proved optimal in study after study; once long 9 positions, a new position must be arguably compelling as it must displace one already long in my portfolio.
I am not one to shower disrespect on Warren Buffett: he is smarter than me and has more money as well! Nor do I intend to sound dismissive of hedging by terming it a ploy. No, I am a plain vanilla investor: long (only), make money, and when the market is in a mood not to cooperate, take my money and seek balance in my life. That balance expresses itself via my relationships with other people, my incessant travels, and an abiding interest in photography. At those moments -- whether with other people or on the road -- I have nary a care in the world, and find that I pursue the ultimate hedging "ploy" -- living life.
-- David M Gordon / The Deipnosophist
Labels: Market analyses
posted by David M Gordon | 7:58 AM
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