mohamed_hassan / Pixabay One of my favorite quotes states that you can borrow someone’s ideas , but not their conviction.

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Q3 2021 hedge fund letters, conferences and more

Half Moon Reports Q3 Loss Of -2.4% As Short Profits Fail To Make Up For Long Losses

Half Moon Capital returned -2.4% net of fees in the third quarter of 2021, according to a copy of the firm’s latest investor update, which ValueWalk has been able to review. Throughout the period, the hedge fund maintained an average exposure of 56.3% net, which was slightly above its average net exposure since inception (2012) Read More

It is a great quote, because it deals with a problem that many investors face. Some of us may be taking tips from others, and may be investing money in companies, without really doing much research. This is a dangerous position to be in, because you are outsourcing everything to another person. You need to get to a point where you have an adequate investment plan for action. Thus, when things change, you would know whether to hold or to fold.

I tend to spend time looking for ideas , either through screening, reviewing my investable universe, reading and interacting with other investors. However, I always try to put each idea and filter it in a way that makes sense for me. That way, I can take personal responsibility for my actions, and take the next step of learning and growing as an investor from there.

I have been investing in Dividend Growth Stocks for about 15 years now, and have learned to try and devise my own set of guidelines that would do the heavy lifting for me. One such guideline has been to review my own investments that I have made. I believe that the ability to review historical transactions is very beneficial for investors, because it can help identify gaps, and improvement opportunities. Flexibility And Adaptability Vs Conviction

In my analysis of my own investments, I have noticed that I cannot really tell in advance which specific company would be the best performer in terms of total returns, or future dividend growth over a set period of time like ten years for example. I have looked at some ideas I posted about in 2008 , and then the list of aristocrats from 2011 . I did not know that one of the best companies would be Lowe’s for examples. But, by owning a diverse portfolio of companies, I had a fair share of winners that compensated for the losers. I did ok, even if I made some mistakes along the way, such as selling perfectly good companies and replacing them with cheaper value traps. Of course, I do try to pick many quality companies, and hold on to them for as long as possible which helps. Hence, I am a fan of diversification, and dislike concentration. I do not know what my top 10 ideas would be, though I presume they would be in my diversified portfolio of 50 – 100 quality securities. Based on my experience, my best performing ideas turned out to be outside my top 10 or 20 convictions.

Analyzing past actions is a very humbling experience, because it shows me that we can have all the information in the world, but that doesn’t mean that we would be right all the time. Hence, I do not believe in having conviction in investing, because it may potentially lead me to overconfidence , stubbornness and inflexibility. I believe that apart from having a few principles, conviction can be dangerous for most investors. It is good to have conviction to hold through the hard times assuming that they do turn, but you also need to know when the situation has changed and you need to move on. I believe that flexibility and adaptability are more important than conviction. That’s because if I am convinced of something, I risk ignoring contradictory information, so I may end up just being plain stubborn and lose money. That’s the risk I am trying to avoid of course.

In general, I assume that my investing universe would likely have a group of outstanding companies that would deliver outstanding returns. I just have to ensure I include them, and then hold on to them. I just don’t know which specific company would […]

source Conviction

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