Mindset and beliefs

Mindset and beliefs

“Ten baggers”

Ten bagger belief: “They happen quickly, never correct and need to be extremely risky to begin with.”

• A ten bagger is an event and not a process over time where a two bagger becomes another two bagger etc that also includes multiple corrections along the way…
• Everybody is “hunting for ten bagger” but most sell out after a double and/or can’t stand a single correction.
• That in order to get a “ten bagger” one must take a huge amount of risk and buy a stock before some major catalyst might happen that typically has a very low chance of happening.
• “The average hold period for a ten bagger in my experience has been FIVE years” – Rick Rule

Share price

Share price belief: “A rising share price is ALWAYS GOOD and a declining share price is ALWAYS BAD”

• That a company going down in price is a negative thing by default and should certainly always be avoided.
• That a short term price decline equals a permanent loss.
• That the only way to have very good long term results is to avoid all short term declines.
• That one can get good long term results DESPITE corrections while it is THANKS TO the correction the long term results can be even better.

Misc

• That a “low” market cap equals a cheap stock with potential for good future returns
• That a “high” market cap equals an expensive stock with low upside potential
• That “the market is always right”, yet we stock pick, and at the same time complains that the market is wrong
• “Everybody is talking about this short term thing, with up or downside risk, so I guess that is what is important and I should focus on as well”
• If I am “right” that needs to show immediately with a rising share price as soon as I have bought a stock
• “I can’t be right if the market disagrees with me for weeks, months or years”

Good long term results

• “It can’t possibly be enough to just have common sense, patience and actually skip short term predictions to achieve good long term results”
• “I need to have advanced spread sheets and complex Technical Analysis in order to beat the market”
• “This stock can’t possibly be a potentially high return investment because it’s not extremely risky”
• “Why should I have good long term results if my past results are poor?”
• “I am not a geo, mining engineer or a fund manager so it would be arrogant and foolish I could do well in this sector”

Coping

• Don’t forget to take profits vs Let your winners ride
• “Sell half on a double”