Investing does not begin and end with the correct stock selection. Even though it is the most important of all components of the investing process, there are other skills and mechanisms that must be carefully thought out, put in place and honed. For the rest of this article I am going to suspend any strict adherence to efficient market theory (or any other theories for that matter) and just write about the practical stuff that I have observed and personally found to work. It might not work for you, but at least it might give you something to ponder.
What is an efficient screening? I think screening should be customised to the style of investing, risk appetite, specialisation and breadth of investment, including whether your screen ranks foreign companies as well or just domestic ones. Many private investors are biased or heavily weighted towards their domestic market. I tweet about UK stocks because my followers are mainly UK investors but I do invest elsewhere, therefore my screen includes foreign companies.
I am not going to write about my screening methods and signals, but I will emphasise why a very, very good screen is akin to a Sushi Chef’s knife. It saves time, flags those companies that you might have missed or warning numbers that might have escaped your notice in the selection and monitoring process. There are techniques to filter and scuttle the numbers down to the companies that possess the features you are looking for.
The usual list includes PE, PEG, EPS, Dividend, Price to Book, ROCE, Operating cash flow, debt, analyst recommendation, momentum, risk, and many others. Some investors employ complex ratios but I would suggest that simple is best.
Investment Ideas and Research
What defines a resourceful, economical and comprehensive research? One aspect is a habit of reading so that when an opportunity presents itself you are able to put together all the variety of information and knowledge you have acquired to recognise it. Recognition of opportunity and the ability to sniff out a good trail is perhaps the best skill an investor could have.
Be resourceful, the internet is your friend. Google Scholar and SSRN are fertile grounds for academic papers on investing styles and ideas. Other search sites include Google patents and Google trend. As for getting hold of broker reports, befriend someone in the industry as they are important. You can read newspaper and online magazine tips – but you can be sure that by the time a company has been tipped, it is already old news for some.
The very first moment you are interested in a company and it enters your watch list; open a hypothetical £1000 on that name that day. While you take the time to research, ponder, doubt yourself and research some more, do watch what happens to that imaginary £1000 position that you’ve opened. Apart from showing you that research time incurs an opportunity cost, in that, there is some information.
Firstly, it tells you the volatility in real terms. Yes, you may calculate it without doing this, but nothing drives it home like watching a real pound value move up and down every day. You will also get the feel of the daily volume, to notice the flow into and out of the stock. How far away are you from the date of reports and dividends? Is a special launch of products or announcements expected? Some may regret seeing their imaginary investment grow by 27% while they dither. Buffett did say their biggest error was ‘error of omission’. There is a fine balance between wanting to do a thorough research and letting the opportunity slip by because you waited too long.
Follow seasoned investors’ tweets, they link to all sorts of interesting stuff and abundant ideas for investments. Caution though, don’t follow blindly, do your own research – but it’s a good point to start. Have all of your investing websites listed in a feed generator service for the latest posts. Google notification for everything: investing keywords or ideas, names of companies and companies’ competitors, Carney and rates, names of CEOs, favourite investor as well as author of investing books … I could go on. Where there’s no RSS email it to a specially created notifications mailbox. A good investor is an organized investor.
The next question in research is how to determine the veracity of the company’s story. Deny it if you will, but a ‘good’ story does move the price. A single company may be viewed differently by analysts and investors. Take Ocado or Twitter, for example. Some call them ‘growth’, but some dismiss them as pure ‘speculation’. In addition, the discounting factor varies from one analyst to the other. Institutional investors anchor their valuation of a company in a grid that includes industry peers and growth characteristics. Determining where a stock fits and where it may move can determine the path ahead.
Professor Aswath Damodaran deals with these kinds of valuation issues in his blog. I don’t think I’m wrong to say that many investors do not apply the same methods and factors when valuing a company. Ultimately, the method of valuation chosen will be biased by the story of the company. This is not theory but a reflection of human behaviour. If we all agreed on the assumptions, earnings forecasts or growth rate for instance, then there wouldn’t be any disagreements as to the value of a company. If we pretend that our belief in the company’s story does not affect our valuations, then we are kidding ourselves.
According to Professor Damodaran, “Firms have become more attuned to playing the earnings game, and have become increasingly adept at beating earnings expectations by playing both sides of the game”.
He also said in his blog, that from studies, “As with analyst reports, there seems to be evidence that the market reaction to earnings reports is a function not only of the earnings number reported but also the accompanying management commentary”.
In addition, “As a believer in intrinsic valuation, I look for ways to tie the information in earnings reports to intrinsic value. To do that, though, you need to look past the top line news (earnings per share) and at the underlying details (revenue growth, operating margins and return on capital). If you do so, you may very well find a report that looks positive on the surface (because the actual earnings exceed expectations) but contains enough negative news (lower revenue growth, declining margins and return on capitals) to cause intrinsic value to decrease. If the market misreads the report as “good” news and the stock price jumps up, you have the makings for a contrarian play”.
There is a good TED talk by Tyler Cowen, the renowned economist and author of “Average is Over”, on stories. The talk is rather funny too.
As Professor Gerd Gigerenzer, author of “Risk Savvy: How to Make Good Decisions” said, “Many of us smile at old-fashioned fortune tellers. But when the soothsayers work with computer algorithms rather than tarot cards, we take their predictions seriously and are prepared to pay for them. The most astounding part is our collective amnesia: Most of us are still anxious to see stock market predictions even if they have been consistently wrong year after year.”
A well-known small cap manager said he would like to see the “whites of the eyes” of management before he buys the story. I try to get hold of interview videos of CEOs or podcasts of results. Sometimes enthusiasm and conviction (or lack of) don’t translate well on paper but must be listened to in the timbre of the CEO’s voice. Try not to be swayed too much here, this is one of the prime behavioural fallacies where “touching” a business can lead to overconfidence. Some investing societies invite speakers from companies; I think that’s quite useful.
What makes a good business? Good businesses may not remain good next year. Sustainability of businesses which include patents, strong distribution network, long term contracts, branding and other moats are important considerations. Of course, no one said you can’t invest in a bad business that is about to get slightly better or even one that isn’t getting better but will not be as bad as everyone thinks. You’d be surprised that you can make money this way too, with the accompanying risks of course. In fact, some of the best opportunities are in this space, but I wouldn’t recommend it unless you have a high risk tolerance.
Good businesses are competitive by nature. An inactive, sleepy business model can no longer survive in today’s environment – even if what you are selling are jam doughnuts. As an investor, I am frequently frustrated that not more companies state their game plans clearly and concisely. In doing so, you provide a better foundation for consensus as to the value of your company, and in the event of hardships, more investors would actually stick by you understanding that it is just a minor glitch in your long term vision. A few extra paragraphs in the report are all it takes. On the other hand, some companies have no concrete game plans and appear to be running around like headless chickens, pecking at everything that comes into sight hoping that it would work.
Beware of too good to be true as well because this might point to fraud or fraudulent behaviour. If you are interested in these kinds of things, head over to Bronte Capital’s blog.
Do not dismiss badly performing companies either. A turn of events, a change in the business cycle, a burst of fresh capital, a reduction in debt level, renegotiation in pension fund terms, discovery of a new technology, a new captain at the helm may be signals of a change in the fortune of the companies. Keep your eyes out for these. The wallflowers can sometimes surprise you.
Moving on, more so than understanding the numbers and checking out the stories is to understand the direction of change their combined analysis is telling you. It’s not just PE. It’s not just debt level, cashflow or ROCE. Definitely not just based on the company’s ‘story’. It is everything together forming a big picture.
It’s fruitful to ask where the company has been, but it is even more profitable to ask where the company is heading to.
In Kahneman’s “Thinking, Fast and Slow” they conducted an experiment where they asked German students two unrelated questions but in a different order.
The first interview asks:
How happy are you these days?
How many dates did you have last month?
The second interview asks:
How many dates did you have last month?
How happy are you these days?
For the first interview, the correlation between the two answers was almost zero. However, in the second interview where the sequence was changed, the correlation was “about as high as correlations between psychological measures can get”. For those answering that they had none to very few dates last month, they were reminded how lonely they were. Therefore, when they were asked next how happy they were; you can guess the answer.
Anchoring behaviour is embedded in the price. Whether the stock has just had its price beaten down or the stock has just rallied evoke powerful beliefs and emotions in market participants. Other than telling yourself not to fall for these thinking fallacies, you can also ask how you can benefit from them.
In addition, you might want to ask what the factors are that would shift the ‘anchor’ to a new normal. That is; what would make investors shift the anchor to a new price, and in which direction? I propose that in the case of micro caps and very sparse data, the heuristics effects are even more prominent. Common sense if you think about it, but just a conjecture thus far as I have no research to back it up.
Mean reversion is a powerful force. This is the assumption that both a stock’s high and low prices are temporary and that a stock’s price will tend to move to the average price over time.
Recently, I tweeted a lot about momentum. Cliff Asness has a popular piece written on the practical aspect of momentum. What you don’t want to do is to jump into a position when the momentum is strongly against you.
I believe different companies are exposed to different ‘treatments’ by market participants. The more straightforward the business is, the less behavioural fallacies influence the price; whereas the vaguer the business is, either because it is built on new technology or no consensus as to its direction, the more the price is determined by a host of behavioural fallacies. Be aware of how the particular company is viewed by the majority of investors but do not succumb to the same behavioural fallacies.
I once tweeted an article and drawings on boat building (not an analogy, but actual boat building) and the importance of the shape of the hull. In boat building, the shape of the hull is related to the type of boat, speed the boat is to achieve, and the type of water the boat dwells in. Learning portfolio building is like learning the principle of buoyancy for a boat, the balance of weights for stability. Very Straussian I know, but so applicable in my opinion. Weighting should reflect your strategy, keeping in mind the risk.
From the article, the sentence “trade-offs between speed (how fast the boat can go with a given power source), stability (how likely the boat is to tip over under a given sideways force), draft (how deeply the boat rides in the water), and cost (how expensive a given design is to build)” gives you some clues as to the similar ideas to think about when constructing your portfolio.
The first thing to notice is the word “trade-offs”. Striving for higher returns would mean less stability to your portfolio. Too much stability (safer equities) would mean you might not achieve the above market returns. A larger draft means you have a lower beta (less similar to the market) but also less prone to the water’s movements. The more sophisticated your portfolio design, the larger the effort to build it, as opposed to buying a cheap index tracker fund.
The article continues, “The more successful of the student-designed clay boats will probably resemble a flat-bottomed bowl. This design will hold many washers — as long as the weight is carefully distributed in the boat. This is a feature of flat-bottomed boats: they require careful balancing of the cargo and passengers, or else they become unstable and prone to tip and take on water. A distinct advantage of flat-bottomed boats is that they have a shallow draft, meaning their hulls do not extend very far down below the surface of the water compared to other hull shapes (see Figure 1). Flat-bottomed boats are thus desirable for moving around in shallow water. Their simple shape also makes them the least expensive type of boat to build”.
Flat-bottomed boats by their features are akin to index tracker funds. However, full exposure to the market would mean that when the market is down, your portfolio is down too. “A disadvantage of flat hulls is that they give a rough ride if any waves are present, because the entire width of the boat’s bottom is in contact with the water”.
“Tapered ends certainly let a boat move through the water more efficiently than a bowl-shape, since water can easily flow around the front (bow) of the boat if it is tapered. The rounded hull, however, presents a problem because such boats roll easily and take on water or capsize”. If you think of the tapered ends as your higher risk holdings, then a rounded hull means you hold more risky assets as a proportion of your portfolio. This increases the chance that your portfolio might ‘capsize’.
“Large sailboats, fishing trawlers, and cargo ships, which do have rounded hulls, generally also have keels. A keel is a narrow V-shaped extension of the hull along the boat’s center-line that helps prevent excessive rolling (see Figure 1b). Because the keel extends down into the water, these boats cannot travel in shallow water the way boats with flat bottoms can. With their complicated hull shapes, these boats are also expensive to build”. Think of the keel as quality assets, assets with relatively higher beta but balance sheet stability.
“Multi-hulled boats, such as catamarans, trimarans, pontoon boats, and some house boats, are very stable due to their wide stance in the water. Each of the hulls can be flat, but usually they are either round or V-shaped. Multi-hulled boats are usually the most expensive to build”. These are akin to hedge funds. Their ability to short and use leverage means that they are able to withstand larger waves than most boats.
There are other useful concepts such as ‘centre of gravity’ and Archimedes Principle that could be applied to portfolio construction too.
Here is the tweet. Other links to portfolio construction articles are also included below the top tweet.
As for the number of holdings, I mostly agree with the Elton & Gruber results that show that 30 holdings are sufficient to achieve diversification, beyond this a private investor is better off buying a fund. Even if you have high conviction you should be honest with yourself about your skills and make use of the breadth available out there: owning less than ten stocks could make for many sleepless nights.
To note though, Buffett said in one of his speeches that if you have high conviction, really know the businesses inside out, then the best number of holdings are six. Rarely is your seventh idea a great one. Apart from the number of holdings, the sizing is also important. As a rule of thumb, the riskier the stock the smaller the holding.
The same goes for liquidity, especially if your time horizon is short. If it’s long you can turn the liquidity premium into your advantage. There is a paper on ‘Liquidity as an investment style’ on my Google page if you are interested. To quote the paper, “An (investment) style gives a pay-off for taking on a characteristic that the market considers undesirable”. If you can figure out where the ‘undesirables’ reside, and yet at the same time minimise the risks you undertake, then you’ve got a good game going.
Having more names in your portfolio allows you to collect this premium more efficiently without having to worry about being forced to exit names at the potential wrong time. DFA built its business on buying illiquid value stocks that people were willing to dump at rock bottom prices.
As a last note on diversification, I would like to put forward a quote I have found this week:
Richard Bernstein, CIO of RBA recently said that “regardless of these healthy signs, most investors continue to focus on protecting the downside. However, investors don’t seem to have learned the lesson of the past cycle. Investors continue to confuse the number of asset classes with diversification. Diversification isn’t based on the number of asset classes; it’s based on the correlation of returns among the asset classes.”
The other consideration is time horizon, a.k.a.,” some things take time to play out”. The longer your time horizon is, the more advantage you have. In fact, any other restrictions incurred by other players that you don’t have is an advantage – larger pool of capital and capacity for higher risk tolerance are advantages that you should exploit. Look at your complete asset picture: equity in your house, pensions, savings bonds – all these can act as shock absorbers when your equity portfolio is temporarily down, giving you breathing room to let it recover. You always need patience and a sense of humour.
Speaking of time, what about the magic of compounding? There is no magic in it, just rates and t corresponding to the years ahead. So what does that tell you? It tells you that rates and your own time horizon are the two very important things that should always be at the back of your mind when you choose an investment. Your style of investment should gradually morph from higher risk to medium to low risk as you age – although I think this statement does not apply to ‘seasoned’ investors. They have invested for a long time and have investing in their blood; they will always feel comfortable managing a ‘racier’ portfolio and have the skills to do it too.
Once you have set up your portfolio, it is your task to monitor it. We have all fallen for the fallacy of monitoring. If you think that monitoring your investments is to check the price of your holdings every second of the day, then you are missing the big picture of what investing is. You are putting yourself on an unnecessary roller-coaster ride which will end up where you began. If you ask yourself why the price moved the way it did today, you will see that there are myriads of reasons, mostly minor supply and demand imbalances and the result of market events that are out of your control.
So what is monitoring? I think for long-term, value driven investing it is mainly watching out for exceptional risks. Value investing has a well-defined road, but just like driving, you do have to watch out for the unexpected. Wringing out the analogy further, this could be the changing of the traffic lights, the sudden dash of wild animal across the road, orange cones, detours and road closures too.
With the “changing of the traffic lights”, the progress of a company is not always at the same rate, no matter how much you want it to be as smooth as your discount factor. Some years would be green light years and some years amber. It is the years where the red light seems to stay on forever that you have to decide whether to keep the faith or take a different route.
“Sudden dash of wild animal” would be the unexpected headwinds that cause the progress of the company to veer off the road. It will be for you to judge whether the company is able to get back on the road; and if so, how long it will take for the company to do so.
“Orange cones” are profit warnings, and once you see one, you will usually see another.
“Detours” are companies that began as one thing when you first invested in them and ended up with other businesses; and “road closures”; -well, that’s just the end of the road.
To add, “Are you dashing into oncoming traffic?”1 is also a good question to ask. This is when you are trying to hold a position against the direction of the momentum, which is not always a really clever thing to do. A sin I have done myself many times.
Closing Positions (#)
Many investors are capable of buying with conviction but when it comes to selling, they fail to stick with their evaluation, especially if the price is rallying on momentum. The temptation to delay the selling and see how much further the stock will rise makes the investor’s behaviour as guilty as that of a gambler. To this, I would suggest rebalancing and disciplined trimming, regardless of your ‘gut instinct’. The price could have moved up further, but it could have very well reversed too -random walk being as it is.
Think of it this way: price appreciation has increased the value of the holding and therefore the risk contribution of the name. Trimming is restoring the balance. On the flipside, for microcap companies, there is an opportunity cost to trimming too soon. So check your thesis before you trim.
Ignoring tax planning for a moment, ideally you would step away from always comparing to your cost price. It’s a sunk cost and there is nothing you can do about it, all that matter is whether the stock will increase from here or not. This thinking makes it much easier to deal with losses. If you don’t think there’s meaningful upside or you have better opportunities in front of you, then it’s time to cut.
When closing positions, it is not intelligence but emotional strength that is required, especially if you have to do so under forced conditions.
Underlying these investment processes should be a safety net of risk management, not unlike the ones underneath the tight-rope walker in a circus. So what is risk? There are many types of risks that need to be considered. One example of risk is that if you are investing in a domestic company which has large overseas interests, then currency risk is something you might want to monitor. Investing consists of ‘returns given a set of risks’ so do not just fixate on the returns part and totally ignoring the risks.
Another example is an Australian agricultural company that I was interested in. After having looked at the business and the numbers, a friend brought up the possibility of ‘El Nino’ on the crops. ‘El Nino’! Not living in Australia, this is something that would not have even crossed my mind.
What is the process of risk-management for your portfolio? A simple approximation would be to roll back your portfolio for a few years and observe measures like volatility, drawdown, beta and maybe even VaR. Maybe one day the risk models used by institutional investors will become a feature in brokerage accounts so you can understand your risk better.
What I would like to emphasise though, is that what investors face in the long term is uncertainty. Professor Gigerenzer said in his LSE lecture (the link is available via my Twitter) that Kahneman mistakes risks for uncertainty, and that these two things are quite different.
Here is a way I would like you to think of uncertainty. Ten years ago, if I were to ask you where Tesco’s price would be at today, what would you say? If I ask you what the sum impact of internet grocery would be on grocers like Tesco, Sainsbury’s, Morrisons, etc. what would you think? Would anyone still shop at a brick and mortar in ten years? Before you protest too much, let me ask another question, are there any CD shops left on Oxford Street? The key word to think about is ‘sustainability’. The key sentence to remember is ‘no such thing as a sure thing’. In the long run no business model is safe, even the supposedly safest utilities are struggling to compete with self-produced and renewable energy while food producers are often under threat from supermarket own brands or healthier diets.
To understand stock level risk better, the first step is to make a list ranking the volatility of each holding. In other words, list the safest to the most speculative of your investments in order. Think of how much (in pound figures or real terms) you can lose from each holding. Have a thought whether those few speculative ones are worth the angst if things go wrong or whether you should reduce the weighting or eliminate them completely from your portfolio.
Next, check for correlation between your holdings. If we are to do this without resorting to detailed data analysis, you could observe how they move with respect to each other and with respect to the market. Think of what common factors affect them and by what magnitude.
In addition, make a list of risks that can also affect the holdings including interest rate hike, exposures to foreign markets, government policies, weather, dependency on other sectors, technological change, and many others.
You will not be able to hedge against all of these, but to be aware of them would mean you understand why a company’s stock is priced the way it is, or to be concerned if the company you are looking at is not considering a particular risk significant to its operations. It may also influence your decision whether to continue holding a stock in the light of new information about a risk that the company is exposed to.
Risk preference and risk tolerance are two different things in my opinion. An investor might ‘think’ he prefers to invest in higher risk assets, but at the first sign of volatility will sell off at the bottom instead of having conviction in his analysis.
I have read that during the time of a boom, everyone makes money, especially the dumb ones (not my phrase), whereas the smarter, more cautious ones miss out on the rally. I guess alpha-smart would be to be dumb at the beginning of the rally and put on your smarts gradually as the rally progresses, with maximum smarts just before the crash. (If only life was that predictable!) As investors, you can’t be too fearful and hold all cash at this moment of low interest rates; but you also need to know when it’s close to the time you might need to pull back.
Although many would suggest not paying too much attention to the economic conditions, these conditions should actually temper the ferocity in which you invest. Returning to the driving analogy, the economic conditions are the topography of land on which your road is laid out. For a true contrarian, when the economic conditions are uphill, the contrarian would step harder on the gas pedal. Alternatively, when the going is downhill and easy, the contrarian would apply the brakes accordingly.
In terms of looking at market conditions, I do believe that as much as the efficient market exists because of perfect or ease of information and the fact that there are plenty of smart people in the market capable of clueing things together; the inefficient market also exists because company’s management can be unpredictable, fads and trends are whimsical, open to influence; fund managers gossip and act on rumours as much as the next person. Where we are is in that narrow alleyway that straddles between these two states of the market.
Put another way, the efficient versus inefficient markets are two sides of the same coin that are flipped according to the sentiment of the market. In times of high fear, it is very likely that managers of funds and investors would abandon models for gut instincts; making decisions based on perception of the mood of the market and what it would do next. Is it possible to notice when the coin is about to be flipped? I don’t know.
I am obviously a fan of Twitter. Be on Twitter and note what investors, analysts, journalists and managers are posting. As long as you’re thinking independently and not easily swayed by what people say, then you can learn a lot about sentiments and how they affect prices.
Maybe I should have put this at the beginning, but perhaps it is a good idea to decide on several rules for your investment plan, print it out and sign it in blood. Have it framed and hang it above your trading monitor. Revise the rules every year as you gain more experience and knowledge, but in general, do not ever break them. Taking out the discretionary element or your ‘emotional’ part out of your process may hurt in the short run but hopefully, would be an advantage in the long run.
Having laid out the rules for when things go according to plan is to ask yourself, what is your contingency plan when things do not go the way you planned? Whether it is from blind spots or black swans, this is something else that you need to print out and place above your second monitor. (By now, you must be thinking- Amni must have many framed papers on her wall…)
The mirror question to when you would bank your profit is when will you cut your losses? How will you cut your losses? Be prepared for such an occasion, otherwise your emotions will take over. Be calm. Execute. Then, don’t look back except for studying and improving future processes.
My favourite play is with companies that I have followed for a while but through some misfortune encounter a (surmountable) obstacle that temporarily depresses its share price. The research is already done, the familiarity is there, and the only action required is to go into position. However, you will need to differentiate between catastrophic news and glitch news. Remember, bad news usually come in threes, so people used to say. To be ready to grasp these opportunities you also need a game plan. You know what? Do print out this ‘opportunity game plan’ and put it up on your wall too.
Becoming an Autodidact
My best advice would be to identify ALL of the processes in your investing; this includes behavioural impulses too, and read a few books on each process. You will find many books on risk management, curbing impulses, stock selection, portfolio construction, trading well, etc.
Lastly, I will leave you with some quotes from our favourite investors, with my inferior ones slipped in between:
“Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble….to give way to hope, fear and greed.” Benjamin Graham
“Make silk purses out of silk.” Warren Buffett
“Risk comes from not knowing what you’re doing.” Warren Buffett
“Try to profit from someone else’s error.” Me
Also; “Try to lessen loss from your own error as quickly and as efficiently – no place for emotions in investing, especially no regret.” Me
“Scrambling out of mistakes.” Charlie Munger
“Long-term growth and strong fundamentals alone don’t assure successful investments. As with most things in life, timing is everything when it comes to investing.” Ian Wyatt
“Do notice if the rats are escaping the sinking ship.” Me
“Acquire worldly wisdom and adjust your behaviour accordingly. If your new behaviour gives you a little temporary unpopularity with your peer group then to hell with them.” Charlie Munger
“Chains of habit are too light to be felt until they are too heavy to be broken.” Warren Buffett
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” Warren Buffett
“The best thing a human being can do is to help another human being know more” Charlie Munger
I hope what I’ve written here helps in one way or another. Keep in mind that I am still learning and therefore, these are not to be taken as investment advice or golden rules but rather a thought piece. Every investor’s situation is unique.
Or as my favourite TV detective used to say, “Just one more thing…..” (2)
“The problem I’m focused on today is what happens when we accept all advice equally and don’t look past the surface to some of the uncomfortable realities.”
“Our job as investors is to ask at least one more question if what we’re hearing sounds either too good to be true or contradicts what we already know to be true.” (3)
1 page 111, “Investing the Templeton Way”