I started to write the following reply to a question on the Hot Copper disccusion board. As it became longer than I intended I decided to post it here.
It seems I have not made my position clear, so perhaps a little clarification is in order. I have a sizable investment in Biota, which I bought around 40 cents when I was analysing Biota on this site. I have not sold any shares. I do not care where the share price in today, tomorrow or next week. When I see a …

Crocs is both a great story to keep an eye and a fascinating story for managers and investors to learn from.

My intelligent and gorgeous wife once told me we should sell company A, which we owned, and buy company B as they were the same price and company B was clearly worth more. My interest was peaked; however, the great opportunity was a mirage, as she was only looking at the share price and that does not tell you the price tag on a company.

Hunter Hall looks compelling with a reward/risk profile of 7:1.

Hunter Hall Limited (HHL.AX) is the David of the Australian funds management industry to Platinum Asset Management Limited’s (PTM.AX) Goliath. While Hunter Hall is David both is terms of size and righteousness, I am primarily interested in which is the better investment. I may want David to win, but who should I plut my money on?

It’s over a year since I read any of the articles I linked in yesterday piece on the Kelly formula and portfolio management. After reading the brilliant article by Michael Mauboussin Size Matters – The Kelly Criterion and the Importance of Money Management I realised that both he and I did not explain how to actually use the Kelly formula in sizing individual positions. So let’s try to fix that clearing ommision.

Using the Kelly Formula for Portfolio Management:

I have two main uses for the Kelly formula, neither of which are the intended purpose. My third and less important use is the intended purpose of Kelly, an aid in determining my indiviudal investment size.

I use Kelly as a comparitive tool and as and aid to focusing on probabilities, risk and returns. Before we dive into each of those I should explain how I use a method that is designed to be used with binary outcomes with known odds for investing, where their are multiple possible outcomes with unknown odds.

At the bottom I link some great articles from Ed Thorp, John Kelly, Michael Mauboussin and Paul Samuelson

A quick look at Hunter Hall International and Neptune Marine Services.

Volume tends to expand in the main direction of the trend. In a bull market, advances accompanied by increasing volume or declines on diminishing volume are taken to be bullish. Conversly, in a bear market, declines are accompanied by increasing volume and advances show diminishing volume. Volume should always be studied as a trend (relative to what has preceded). – Richard Russell, The Dow Theory Today

Last night, just when I wanted to close my eyes and go to sleep. my partner asked me how risky our investments are. As my dearest almost never asks about our investments I found this particular question and its timing quite bewildering. Bloody mass media and credit crunch.