Saturday, February 11, 2012

Anthony Bolton's Nemesis

Copied from a TMF article. Sometimes it's worth reminding myself of the basics.

Bolton reveals three investment mistakes he has made repeatedly:
  • poor management
  • ineffective business models
  • weak balance sheets - his number one factor
Bolton says that some of his favourite types of shares are those with limited downside and reasonable upside. In his own words: "These 'skewed' return companies are ones where you shouldn't lose too much money and you might just do very well."

IIRC, Pabrai did an investigation into Buffett's worst mistakes. Weak balance sheets featured highly.

Contrariwise, Greenblatt seems to have made a lot of money in mundane businesses which had a lot of debt which was gradually cleared up. I have also been reading through BB posts where people have invested in some very sticky situations, and seem to do quite well at it. It looks to be a high stakes game where picking exactly the right spots, and timing, are crucial.

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