Great article! Yet, looking at your table.. for me the conclusion is different. As demonstrated by the numbers it makes more sense to focus on not loosing money, meaning to have as many winners as possible, rather than focusing on having big winners (like you said, what Buffet did). From a logical point of view there are not many home-run investments and if you are lucky enough to find one it is often not well predictable. A lot of people nowadays are looking for multibaggers rather than focusing on dead-boring cheap companies who return above average with a high chance.
Thanks for sharing Tobias. Yes it is equally important to not lose money. For me, not losing money is never been wiped out, then to literally not have any losers which is impossible. If one does not have any losers, they are either not taking enough risk, or not taking risk.
If focus on not losing money, one could also focus on obvious winners who had been growing well with strong profitability and that is also typically closer to the tail end of the S-curve which typically has lower multibagger return profiles.
There are many ways to play the investing game. Some like to buy $1 coins which stay at $1 for 60-70 cents on the dollar and sell them when they get to 90 cents. And they have to finding many new $1 coin. We prefer to buy $1 coins that we think can become $10 for $1.50 and hold them for long periods of time.
A different game, and thus a different risk vs return contribution profile. In our game, concentration becomes the outcome, when multi-bagger winners win, they win really big, and drive the majority of returns.
Great article! Yet, looking at your table.. for me the conclusion is different. As demonstrated by the numbers it makes more sense to focus on not loosing money, meaning to have as many winners as possible, rather than focusing on having big winners (like you said, what Buffet did). From a logical point of view there are not many home-run investments and if you are lucky enough to find one it is often not well predictable. A lot of people nowadays are looking for multibaggers rather than focusing on dead-boring cheap companies who return above average with a high chance.
Thanks for sharing Tobias. Yes it is equally important to not lose money. For me, not losing money is never been wiped out, then to literally not have any losers which is impossible. If one does not have any losers, they are either not taking enough risk, or not taking risk.
If focus on not losing money, one could also focus on obvious winners who had been growing well with strong profitability and that is also typically closer to the tail end of the S-curve which typically has lower multibagger return profiles.
There are many ways to play the investing game. Some like to buy $1 coins which stay at $1 for 60-70 cents on the dollar and sell them when they get to 90 cents. And they have to finding many new $1 coin. We prefer to buy $1 coins that we think can become $10 for $1.50 and hold them for long periods of time.
A different game, and thus a different risk vs return contribution profile. In our game, concentration becomes the outcome, when multi-bagger winners win, they win really big, and drive the majority of returns.