Professor Glen Arnold

Previous Newsletters discussed evidence appearing to contradict the notion that the stock market is always efficient. Those were posted on these dates: Value vs growth: 23 January – 3 February 2015, 22-24  March 2016, 26 January 2017, 17 March 2017, 27 April 2017 Net current asset investing: 14 – 22 October 2014 Cyclically adjusted price […]

I’ve looked at the entire UK market and, as expected, I struck out, failing to find any net current asset value share worth investing in. Not all is lost, however.  On my search for a well-managed company with fair business prospects and valued at a low cyclically adjusted price earnings ratio, CAPE, I came across […]

Efficiency requires that new information is rapidly assimilated into share prices. In the sophisticated financial markets of today the speedy dissemination of data and information by cheap electronic communication means that there are large numbers of informed investors and advisers. These individuals are often highly intelligent and capable of fast analysis and quick action, and […]

I’m going through the entire UK market to try and find a company meeting the criteria for a net current asset value investment. If I find one I’ll buy it and write a report for you. I have to say that I’m not too hopeful.  NCAV investments seem few and far between these days – […]

Rule 9.  Keep your emotions in check   The investor’s worst enemy is likely to be himself – his feelings and compulsions, his decision-making flaws. A sound investment strategy can be scuppered when the crunch-time comes because excitement, fear, impatience, greed and other emotions get in the way. Being temperamentally well-suited for investment is far […]

Learn from their mistakes – you can’t live long enough to make them all yourself. Learn from their hard-earned experience what works and what does not. The great investors follow the principles of bottom-up analysis in an independently minded fashion. They are wonderfully inquisitive about profit, balance sheet, cash flow, the notes to the accounts […]

Make yourself aware of the remarkable findings in academic papers that test whether the stock market can be beaten. On the whole, they conclude that it is very difficult to out-smart the markets (that is, doing better than just buying a broad spread of investments and going to sleep for a decade or two). However, […]

You are vulnerable if you invest in only one or two shares, so diversify. Beyond about 10 securities however the benefits of further diversification become small – your knowledge is going to become more thinly spread. Better to concentrate on shares within your circle of competence, where you have an analytical edge than diversify into […]

When managing your own portfolio do not let money slip away in trading costs, taxes and fees. And when paying someone else to manage your money make sure the fees do not take away the bulk of the investment gain. Fund manager fees of 1.5% sound low, but can easily remove one-third of the gain.  […]

The distinction is not determined by type of security you buy, nor by the length of time you hold, but by the attitude of mind when you buy. An investor conducts thorough analysis to understand the underlying business, only buys when reassured as to the safety of the principal committed and aims merely for a […]