HSO takeover offer will be huge for Ramsay, page-122

@thunderhead1,

The investing journey is a lifelong one and involves the constant learning of new things.
As such, we should become better investors with the passage of time.

In that light, if I may say so, the sorts of companies you own are somewhat atypical of someone who has only only been investing for a relatively short period of time, and the nature of your comments suggests someone who is mature beyond his/her three investing years.

So, kudos to you; you are certainly miles ahead of where I was at the same point of my investing career.

For context, at Year Three of my investing career, I was still rabidly speculating in the madcap mayhem that is the resources sector, trying in vain to jag that rare junior explorer that was going to discover the next Eldorado or that one-in-a-thousand oil driller that would drill into a 100 million barrel reservoir.

When that failed, I "graduated" onto playing the "announcement arbitrage" or "news-flow arbitrage" game, in the naive belief that I might have been blessed with some unique and rare gift of being able to predict the sorts of short-term announcements/events which would make share prices respond favourably.

When that, too, proved unprofitable, I then became a bit of a strict dividend yield devotee. Unfortunately, I failed to discern that not all dividend yields were necessarily sustainable (in fact, I learnt - painfully - that the highest dividend yield situations tend to be the ones in which the dividend gets reduced, if not suspended altogether).

So, I for the first 5 or 6 years, wandered around the rookie investor badlands, thinking I was investing when all I was really doing was purely guessing (and generating some nice capital losses, as well as making my stockbroker very happy, in the process).

Then, in the late 1990s, just before the dotcom bubble started to implode (and probably just when I was about to get sucked into it, in lemming-like fashion) I met a guy who was a full-time investor, and who was managing what he called "a quiet and risk-averse value fund".

The salient characteristics of this fund was that it was quite small (~$35m at the time), and comprised the capital of handful of individuals (mainly family and friends... maybe, 20 or 30 of them, I don't recall exactly how many).

But the two main things that struck me most about the portfolio he had assembled was:

1. Its investment return history (this individual had, single-handedly, beat the market by around 10%pa over the 14 or 15 years that he had been investing the money of his family and friends), and

2. the fund's turnover - and this was the thing that made me really sit up and take notice - was something like 5% pa.


This compared to dumb me, frantically churning my capital over something like 3 or 4 times a year, with all the attendant cost leakage, and barely coming out ahead despite it.

That's when I started to learn about identifying high-quality, well-managed businesses with durable cash flows, which were able to grow those cash flows organically, and then buying and holding onto those businesses while their intrinsic values increased over time.

And don't beat yourself up about selling too much about selling CSL.
The beauty of the stock market is that, if you do it properly, it will create untold personal wealth for you, even if you make some errors along the way (like selling CSL).

You're certainly not alone; we've all got similar "Doh!" stories to tell.


PS. I didn't quite understand what you meant by, "My portfolio is pretty lopsided too, partly because of how long I have left to participate in this investing lark, and partly because of circumstance. What I am lacking in particular is a solid base for it."