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22 Mar 2023 - Pull the Weeds
Pull the Weeds Marcus Today February 2023 |
The life of a trader is not what most of us might imagine it to be - ie. glamourous, exciting and paved with gold. More likely it is solitary, private, a bit boring and when done right, provides a living. We could all be traders. We could all be Arnold Schwarzenegger too. Go to the gym every day, lift heavy weights, drink protein shakes, avoid chocolate, and talk in a vague middle-European accent. But the reality is, who can be bothered? We could all be traders. We could all be Arnold Schwarzenegger too. And who can be bothered to be a trader because to do it properly is pretty much a full-time job, and most of us already have one of those, and those of us who don't probably don't want one. But that doesn't mean we can't adopt some of the core principles of the job, principles that apply not just to traders but to investors as well, principles like "preserve your capital" and "cut your losses". Clichés all, but as any trader will tell you, no trading system will succeed without them and no long-term investor will either.
With that mindset long-term portfolio investors "excuse" the losers and do nothing about them. But if you really want performance the losers are just as important as the winners and you need to protect against them. To do that you have to pull the weeds and plant flowers in their place. And if flowers turn into weeds, pull them and plant some more. Do this relentlessly and you will end up with a garden full of blooming flowers. How do you pull weeds? Simple. Use stop losses. How? Let's cut to the substance. What are they: An order that automatically closes your trade at a predetermined price, thus limiting your loss. A stop loss is a mechanism that short circuits debate and emotion and provides certainty. Requirements: Forget the concept of "portfolio". Think of every stock you hold as a separate trade. Preset a stop loss for each individual holding, preferably when you are unemotional and in possession of a clear mind. The time of purchase would be good, but any time will do. The mechanism: It is impossible to set a rule for everyone. For those of us without trading systems, you can use a number of different methods to set stop loss levels.
Ultimately there are a lot of ways of setting stop loss levels. As noted, a flat percentage is very basic. But the core to it is to make the decision to use them rather than rely on guts, to set your stop loss levels early, to set them for each individual stock and stop thinking in terms of "the greater portfolio". I suggest you read some trading books - the foundation stuff that takes you ahead of the average punter in terms of trading discipline. Most good trading books are very hard work (dull) and full of theory. And they often, interestingly, have nothing to do with picking stocks but are about risk management.
Managing the investment, not making it. Most high (low) brow investors working off Buffett quotes have been brainwashed to think it's all about choosing what to buy. For a trader its all about what you do after you buy. That's the bit that needs a plan and discipline and vigilance and where almost everyone goes wrong and doesn't bother. If you are one of those "Set & Forget", Buffett quoting, ineffective "Invest as if they are going to shut the market for ten years" investors, shut your eyes, exercise your first stop loss, and see what happens. You will instantly move from confused, indecisive and unfit to invest, to something…better. Forever. It's not hard. Try it. Author: Marcus Padley, Founder of Marcus Today |
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21 Mar 2023 - Performance Report: Bennelong Emerging Companies Fund
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21 Mar 2023 - Performance Report: Emit Capital Climate Finance Equity Fund
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21 Mar 2023 - Trip Insights: Americas
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20 Mar 2023 - Performance Report: Bennelong Concentrated Australian Equities Fund
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20 Mar 2023 - Performance Report: Collins St Value Fund
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20 Mar 2023 - New Funds on Fundmonitors.com
New Funds on FundMonitors.com |
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Ellerston Asia Growth Fund | |||||||||||||||||||
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Ellerston India Fund | |||||||||||||||||||
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Ellerston Global Equity Managers Fund - Class C |
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Ellerston Australian Emerging Leaders Fund |
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Ellerston 2050 Fund |
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20 Mar 2023 - Manager Insights | PURE Resources Fund
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Chris Gosselin, CEO of FundMonitors.com, speaks with Daniel Porter, Portfolio Manager at PURE Asset Management. The PURE Resources Fund is a specialist hybrid equity fund with an absolute return focus, investing in Australian emerging resource companies. Since inception in April 2021, the fund has returned +9.13% per annum with an annualised volatility of 8.09%.
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20 Mar 2023 - Experiences Rule!
Experiences Rule! Insync Fund Managers February 2023 The Experience Megatrend, of which travel is a component, is one of 16 in our portfolio. Borders have reopened and travel is at full throttle. Growth rates in this industry are through the roof as the industry powers ahead from the COVID-19 pandemic. An individual's desire to travel is hardwired into human DNA. The rapid speed with which the recovery is occurring can be seen from the chart on the right; this is before China's reopening has its likely large impact. Whilst airlines and cruise ships may be the more obvious ways to invest in this megatrend, they come with high levels of financial and operational risk. Companies like Qantas have had to raise capital every time there is a crisis. Their long-term performance has never reached our minimum quality hurdles. Our work has identified online travel agents are best positioned to deliver some of the highest and most consistent levels of profitability in this megatrend. No capital raisings were required, despite the shutdown in travel because of their exceptionally strong balance sheets. As we move into an environment where the use of digital apps to efficiently build travel itineraries accelerates (including researching, booking, and paying), investing in online travel agents should provide one of the highest quality ways to participate in the resurgence and secular growth in travel. Funds operated by this manager: Insync Global Capital Aware Fund, Insync Global Quality Equity Fund Disclaimer |
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17 Mar 2023 - Hedge Clippings | 17 March 2023
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Hedge Clippings | 17 March 2023 With friends like Keating, Albo doesn't need enemies! This week saw former PM Paul Keating, the Labor Party's elder statesman, and in his day chief head-kicker of the Liberal Party, give an almighty serve to PM Anthony Albanese, his deputy and Minister for Defence, Richard Marles, and Foreign Minister Penny Wong. This was vintage Keating, except it seems he's become a grumpy old man. Once upon a time he mixed sarcasm and humour to make his point. This time it was pure bile, and all the more extraordinary as it was aimed at his own troops. With friends like that, who needs enemies? In our view it was also hypocritical of Keating to say of Penny Wong: "Running around the Pacific Islands with a lei around your neck handing out money, which is what Penny does, is not foreign policy. It's a consular task." For the record, below is a photo of the then PM wearing what looks like a cross between - we're not even sure how to describe it - and wearing a lei around his neck, back in the day when he thought he was the Messiah. An opinion of himself he obviously still holds. Both the photo above and Wednesday's verbal spew were of course theatrics, but what's apparent is that Xi Jinping's hand is seriously manipulating somewhere up the back of the Keating puppet. He seems to think China is blameless, faultless, and just a benign and growing power in the Pacific, and around the globe. Forget human rights abuses, forget the facts, forget playing the ball - play the man, or in this case the woman. And when Keating was asked a question he didn't want to answer - by a young (female) journalist - he used the old get-out-of-jail put down response: "the question is so dumb, it's hardly worth an answer." And to another journalist's question on human rights and the treatment of Uyghur minorities in Xinjiang, he said it was open to debate, and deflected the question by referring to India's treatment of Muslims. Here's what Amnesty International say about China's approach to Ethnic Autonomous Regions: "The (Chinese) government took extreme measures to prevent free communications, independent investigations, and accurate reporting from the Xinjiang Uyghur Autonomous Region (Xinjiang) and Tibet Autonomous Region (Tibet). The government continued to implement far-reaching policies that severely restricted the freedoms of Muslims in Xinjiang. These policies violated multiple human rights, including the rights to liberty and security of person; privacy; freedom of movement, opinion, and expression, thought, conscience, religion, and belief; participation in cultural life; and to equality and non-discrimination." Keating's approach is, and always has been, to tip a bucket on anyone with the temerity to challenge his bigoted view of whatever subject he chooses to be an expert on. And there aren't many he doesn't! He obviously loves China, and equally hates America. As for the cost of the submarines under the AUKUS deal, it is budgeted at A$368 bn. in total through to the mid 2050's. China's announced defense budget this year alone is US$224.8bn. (A$321bn.) up 7.2% in 2022, although the Center for Strategic and International Sudies (CSIS) reports the actual figure maybe 1.1 to 2 times higher than the official budget. According to this search of Google, China has 79 submarines, 12 of which are nuclear powered and armed. China's defense spending in 2021 was higher than the next 13 Indo-Pacific countries combined. No doubt Keating will pooh pooh those figures as well. One can argue the cost and the strategic and military wisdom of the AUKUS deal, but while Keating's kow-towing to China might win Xi's praise, it won't win his respect. And while there's some months to go yet, it's our guess he's off Albo's Christmas card list this year! Moving right along... Good to see Ken Henry re-enter the fray, arguing for a complete re-think of Australia's over complex and outdated tax structure. However, as we argued in last week's Hedge Clippings, finding politicians of any persuasion to grapple with the issue won't be easy. But maybe if there's bi-partisan support for AUKUS submarines, there's a chance? Contagion in the banking system has been front and centre of the financial pages since SVB ran out of cash last week, thanks to rumours that spread virally via social media and Silicon Valley's IT savvy elite, with the problem spreading to First Republic Bank. At this stage, it seems that the contagion, while real, will be contained by all banks standing shoulder to shoulder, but it's a clear reminder that when faced with the potential for loss of capital, bank depositors large and small will act first, and ask questions later. And finally, Happy St Patrick's Day to the (reported) 70 million people of Irish heritage who live outside Ireland, and to the 7 million who still inhabit the Emerald Isle. Ireland plays England in the six nations rugby in Dublin tomorrow, and based on form should win hands down, as long as the Irish team didn't overdo their St Patrick's day celebrations beforehand. |
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News & Insights New Funds on FundMonitors.com Manager Insights | PURE Resources Fund The Long and The Short: Could the year ahead defy the Fed? | Kardinia Capital Stock Story: Walmart | Magellan Asset Management February 2023 Performance News Bennelong Kardinia Absolute Return Fund Skerryvore Global Emerging Markets All-Cap Equity Fund Bennelong Australian Equities Fund L1 Capital Long Short Fund (Monthly Class) |
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