Showing posts from December, 2010

Book Review: Risk and the Smart Investor

‘Risk and the Smart Investor’ is written by David X Martin. Interestingly, the author is a former risk manager of Citibank. The book is available in NLB.The book provides a risk management framework with anecdotes and a fictional story. It also contains some very practical advice on thinking and acting on risk. Overall, I find the book not bad.Interesting Points:a) Risk Management Framework:i) Assessment- Know where you are. Assess your current position.- Know what you do not know. Grasp the limits of your knowledge. Question the assumptions.ii) The Rules of the Game- Find out your risk tolerance in relation to your goals- Demand Transparency. Seek to fully understand the risk. Discuss the risks openly.- Diversify- Ensure that checks and balance are in place. - Risk management never ends.iii) Decision Making- Consider all options. Always provide yourself with an exit strategy. - Ensure that risk is managed in every step of the process- Reputation is important. Check the reputation of …

Book Review: Billion-Dollar Lessons

Billion-Dollar Lessons, What you can learn from the most inexcusable Business Failures of the Last 25 years is written by Paul Carroll and Chunka Mui. The book is available at NLB.I am a believer in learning from other people’s failures. Thus, I am happy to see this book available in NLB. The book has two portions. One is about the failure patterns and two is on how to avoid the same mistakes.Generally, I find the first portion of the book interesting. The second portion will be a bit dry. Nonetheless, it should be a good read for investors, since the authors did have investors (besides the corporate managers) in their mind, when they wrote this book.Interesting Points from the book:a)These corporate failures often do not result from failure to execute. Neither are they due to luck or timing. Instead, most failures are due to bad strategies. In other words, the strategies are bound to fail from the start, unless the company change courses. b)Half of these failures may be avoided if co…

Afterthoughts about recent selling decisions

I shall record some afterthoughts of my selling decisions in the last two months.
First, I dispose my Bright World stake at around 35 cents, which is much lower than the 50+ cents now. What interests me is not the 'gains' lost. Rather, my interest is piqued by the thought that my lack of knowledge (or failure to predict) the quick rise in stock price is the cause for the gains lost. As I do not know any story that may lead to further large gains in the price of Bright World, it becomes logical for me to sell Bright World and switch to other more attractive stocks.
In short, I find it interesting that the 'gains' lost is somewhat deserved, since I do not know any reasons for further large price increases in Bright World.
Second, I dispose my Valutronics stake, after reading in a book that entering into adjacent markets may not be profitable at times. Perhaps I become more risk-averse after reading the book. Or probably, my selling decision is due to the availability bias…