Tutorial 76-80 Recap
1) SEEK ASYMMETRY - the Investment Masters seek situations where the potential upside is much greater than the downside. The best opportunities are those where you have high potential for gains with only a small chance of loss. Buying stocks with a large margin of safety helps lower the downside risk.
2) NEW LOWS - the New Lows lists can be a fertile ground for searching for mis-priced assets. But remember, just because a stock has fallen 50% doesn't mean it can't fall a further 50% and so on. Be careful of value traps.
3) THE IMITATION GAME - the Investment Masters take note of what other smart investors are buying. It's worth looking at what other outstanding investors with long term track records have put real money to work in. When other investors buys stocks, unlike Wall Street analysts, they have skin in the game. That's not to say you still don't have to do your own work, remember even great investors make mistakes.
4) SPIN-OFFS - the track record of companies that have been spun-off from larger entities tends to be good due to market inefficiencies. Once again, not all spin-offs are alike. You need to do the work to determine the specific characteristics of any spin-off company. Characteristics to look for include: the spin-off being small part of the business, recent high levels of capex in the spin-off, management teams moving to the spin-off, attractive incentive scheme for management post spin, shareholders who won't want the spin-off due to index/other reasons, potential corporate appeal of the spin, the spin being a mismanaged/neglected entity etc.
5) CATALYSTS - The Investment Masters understand that catalysts can expedite investment returns and reduce a stocks correlation with the broader market. Many Investment Masters seek a catalyst when shorting stocks.