a good return
It doesn’t make much sense that a simple website can teach you how to make a fortune in the stock market. All things considered, what chance do you have against an army of professional investors with PhDs, advanced calculation models and billions in their portfolio?
A competition between the professionals and those who are just starting to read about investing seems less than fair. The truth is, it’s not fair. The professional portfolio managers don’t stand a chance against you and this site.
There’s no magic formula for success in the stock market – but if you’re willing to invest a reasonable amount of time and energy, you can expect good returns and maybe even a fortune on the other side .
A random walk down Børsgade
But how is that possible? Let’s start with the basic premise of the academic literature: it’s not possible to beat the market consistently other than by luck. It’s called the efficient-market or random-walk theory.
We can choose to accept this premise. In this case, you can take the easy way out and simply buy one or more index funds that track the entire market at very low cost, such as a European, American or global index.
It will save you time and will provide a long-term return that is around 1% better than active portfolio managers. Before cost. Not bad at all.
The professional's challenge
Fortunately, we don’t have to accept the efficient market premise. Or just take the easy way out. We can choose to take the fight to the professionals and beat them on their own turf.
From a practical standpoint, the professional investor has to live with the fact that a large portfolio inherently presents challenges. When picking stock number twenty, fifty or eighty, he pursues a strategy that is forced upon him by the size of the manager’s portfolio, legal issues or independence – but not because he feels his last choice is as good as the first. Or that it significantly changes his risk. He must continuously come up with a wealth of great new investment ideas, choose from a limited investment universe of the most followed companies, buy and sell stocks without affecting their price, and operate in a world where his returns are measured every quarter or even every month. Fortunately, it’s not you.
Fish where the fish are
The private investor can capitalize on these challenges. Instead of thinking we can predict the future and pick tomorrow’s winners, we need to apply our knowledge in areas that are not of interest to others. If you want to catch fish, the first rule is to fish where the fish are. This is typically in waters that haven’t had hordes of trawlers passing by.
If you spend your time looking for companies and situations that are only followed by a few other investors, you significantly increase your chances of finding companies whose market price does not match their fundamental value.
Good start...
Borsgade is written to help you get a good long-term return on the money you invest. Whether you choose the simple passive model or go on a treasure hunt for companies and situations that can deliver higher (or lower) returns than the market.
Before you make your first purchase, I recommend that you start reading:
2) Lifecycle guide for allocation
3) Principles for the Intelligent Investor
The three articles will give you a basic understanding of investing and how it’s done in practice.
Once you’ve finished the introductory ‘squats’ and read the articles above, I highly recommend taking a closer look at some of the recent interviews and letters from legendary investors and my articles where current topics are discussed. Another great way to learn is to immersing yourself in one of my top recommended investment books.
Have a great time!
