The following advice is offered with Matrix Composites & Engineering Limited (MCE) owners in mind, but it applies to all value investors who are holding on to fully valued companies.
I offer this unsolicited advice as I believe there are a number of new “value” investors who are sitting on substantial gains in MCE and my view is they should book those gains and move on.

Is there a margin of safety at the current level? I think not, the only way to get see a decent MoS is to use a …

Investing is about expectations. Look for companies where the expectations are too low. This is usually caused by pessimism, controversy, complexity or fear. This belief has been echoed over the ages and expressed in many ways by Ben Graham, Warren Buffett and other value investing luminaries. The idea is very simple, yet surprisingly hard for most investors to implement. Buy fear and sell greed!

So you want to be an investing superstar. Or at least retire comfortably with control over your own finances. Here’s a simple starting point for Buffett like returns.

Buy stock in the highest book to market decile, rinse and repeat.
Hold more cash when the market is above long term trend lines, deploy that cash when it is below.

When is price the same as value?

I have subscribed to dozens of investment newsletters and sites over the years and used to read newspapers. What follows are my opinions based on past experience, the publications mentioned may have changed since I subscribed.

“With small companies, you’re better off to wait until they turn a profit before you invest.” Peter Lynch – 20 Golden Rules
Investing without profits is playing with fire.

Concentrate to accumulate, diversify to protect.
When you diversify do it via a broad index or specific individuals, who through careful analysis you judge to be extremely competent and capable of significantly* outperforming the index.

There’s a chance that I’m being revisionist, but I think Inch Worm that started me on my investing path. When I discovered that if I kept doubling I soon got to 1000 (1024 to be exact) and as that was one thousand, I therefore knew the entire doubling number series for all the numbers I knew, 500 trillion in 49 doubles.

The most important double to me was always the last one. That final iteration doubled all my previous doubles, no matter how long I had been doubling. Starting at 1 it takes nine doubles to get to 512, while the next iteration by itself would add 512 more. That always seemed phenomenal to me and it was that final double that I learnt to focus on and not the first double from 1 to 2.

October 1982 TV debut of Peter Lynch.
Buy What You Know
“Average investor is out there in some industry…and they’re going to see those industries turn and they’re not going to buy those stocks…they have a big edge… they are months ahead of me”
Common mistake..buying a stock as it has fallen from X to two thirds or half of X. Beware bottom fishing
Peter Lynch nails the edge most amateur investors enjoy, but seldom capitalise on. Most people have an edge in the industry they work in. Funny thing is most of the money is controlled by people who …

I can’t help but drift into a pirate accent when I maul the pronunciation of CAGR. I’ll try to slip CAGR in during my first ever podcast. Compound annual growth is one of the cornerstone concepts of investing and wealth. I first mentioned it in this post, my worst investment in 2008, but have never explained it.