Since 2021 is just around the corner I thought it might be a good time to look back and review my analysis on this website. The benefit of this would be to ensure that I’m providing quality analysis to others, but most importantly, to myself! Without reviewing yourself, it’s easy to let your ego convince you that everything you do is right, which stops you improving or even ensuring that you’re doing the right thing.
How will I measure the performance of my analysis?
This is a tough question. If I were a trader, I could just look at the “Buy” ratings I gave stocks and see if the share price went up after the article. I could then further quantify the success by weighting my results against how much I could have made on my trades. But I’m not a trader. I am an investor who has a specific strategy to attain my goals. For such an investor, it’s not about buying a stock and seeing if the market pushed the share price up; it’s about buying a stock and seeing if the reasoning was justified.
Good investing (as opposed to trading) is not measured by prescience of the share price, but sound reasoning within a fitting strategy.Lewis Hurst
Given that, I will now go through the years articles written under the Investing section of my website and see what I can glean…
Looking through my articles over the past year, I can draw the following conclusions:
- I was almost always right with my analysis when I did thorough research.
- I was good at predicting where share prices would go.
- I was bad at acting on minute indications that something might be wrong – even if I was able to detect that there was possibly something wrong.
- I was terrible at predicting the impact of Coronavirus and the recovery, particularly around retail stocks where there has not been enough information to perform a proper analysis or where directors have not been forthcoming with information.
- I have seen people on the internet (Facebook and Sharetrader.co.nz) using logic that was written in some of my articles – both in valuation techniques that I created and in explaining the logic around why stocks are priced the way they are.
- I have bought stocks without doing the full research, which caused me to sell them after doing the work that I should have done in the first place. Specifically, my assumptions have been very wrong when I did not do the full research required.
- I was bad at predicting where the economy was going.
- I was good at predicting the effect of fiscal stimulation.
- I managed to publish information about the Chinese producing a COVID19 vaccine before it reached national media.
- Finally, there are a LOT of speeling mistakes in my articles. I apologize for this.
Despite a lot of red in the above list, I think I didn’t do too badly. Basically I’m good at pricing stocks, picking opportunities and doing the research, but bad at predicting things when there’s not much information, and I need to make sure I don’t buy without researching things thoroughly.
I think the one thing of concern is that I need to react quicker to the suggestion that there might be bad news, and I need to somehow address my inability to predict the future of the economy.
To do this, I will keep trying to predict the future of the economy until I get good at reading the signs (assuming that such a thing is possible). Until I get good at this, I will re-engineer my investment strategy to account for my inability to mitigate this risk – which is something that I intended to do anyway in light of my changing financial circumstances as I accelerate towards retirement (or perhaps I should say “financial independence”, as I’ve not decided what to do about my work plans), which should be at the end of 2021 or some time in 2022.