Up and down

I am incorporating my recent findings about human nature into my investment strategies now. Mainly, this and this. How are these important to investing you ask? Everything and nothing.

After realizing that certain part of the population will come to the same conclusion when fed the same stimulus, I begin to understand the wave effect of investment. As I’ve mentioned before, I tackle investment with psychology and analysis. You can’t treat the mass of investors as an infinite number of random people with random thought, but rather a selected few that has different characteristics and reacts in certain way when fed the same stimulus. Which is why, it is very fun to watch the US housing sector’s collapse play out. If you’ve been following it closely as I did, you will notice that each ripple of the collapse are caused by the collapse of a ring of people who think in a similar way.

The new radical thinking in the second article is only beginning to sink in to my daily life and strategies, but already I am seeing the effect it has on my stock picking. I now look at more aspects of a company than its financial statements and its history. It’s more about what the management did during crisis to turn the ship around, their future products, the consumer opinions and all around putting myself in the CEO’s shoes when an event occurs. I ask myself, what are the facts presented during the decision and why am I taking this decision over the other?

Man, a lot happened this quarter. My financial knowledge nearly tripled in this quarter. Check out the summary yourself.