I'm not able to predict short term events: 10-Q earnings, news, hour-hour price movements,missed analysts estimates etc.If company grows 10% p.a. I have to wait 5 years to double its earnings. 

Valuation games don't work because company can be selling for less than net asset + less than book value (don't rely on higher valuation in the time of sell).

Every investment is complex macro (country,currency,sector) + micro(management,moat, behaviour to shareholders). To invest in mining companies with the idea that macro doesn't matter is nonsense.  

Analysts overvalue their estimates quite often,CEOs lie on regular basis and life expectancy of companies is quite short (40 years).

Some businesses are better for investing than others. 

When market falls everything falls - no exceptions!

The difference between first class research and average research is thousands hours (from outside it looks the same just pushing buttons.)

Pelcmarek,

I like you a lot, but you are not gonna get anywhere if you put 100% of your money in energy and commodities.

You need to spread it out and add some consumer staples and other companies with a durable competitive advantage.

Theo is in the same boat as you - overconcentrated in industries with no long-term advantage.

I also like Theo, so I guess I'm saying, that you guys need to spread the love to some other sectors.

The best two sectors over at least 60 years is consumer staples and healthcare.

- Vooch

Vooch,

I think you've added a lot to Stokblogs and this is not a personal attack, but I have to strongly disagree with you here. Maybe I'm way off base here (and I'm sure some bloggers will tell me I am) but my understanding of the concept of diversification is that it is very specific. I will outline my position and let the attacks begin!

Diversification performs two functions. One of which is useful to the investor, the other being only useful to the advisor/planner/broker/salesperson. Diversification among individual companies limits company specific risk. This benefits the investor. A classic example is Maple Leaf Foods in Canada. It is now getting creamed because a number of people have died from tainted meat that has been identified as coming from their plant. Of course, they are being sued, have had to shut down operations, and are facing a marketing nightmare.

Will people stop eating? No. Will they stop eating this company's products? Yes.

The second type of diversification is merely a sales tool. A portfolio that is broadly diversified between sectors reduces volatility, but contains unnecessary risks that are being taken solely for the sake of dogma. For example, over the last year there are a couple of sectors that should have been avoided (financials, etc.) but would have been included in a diversified portfolio simply for the sake of diversification.
BTW, don't even get me started on index funds I realize that investors deal with uncertainty and diversification is a tool to deal with that uncertainty. However, I think it is the equivalent of using a nailgun to fix a photocopier. Stock and commodity markets are volatile. If you are not suited to dealing with this (and a lot of people aren't), hire a professional. Don't just buy one of everything and hope it all works out.

My apologies to all for the rant. I had to get that off my chest.

SunTzu

SunTzu,

You are also one of the few that know what you are doing, imo!

I've seen your account drop to 85% of norm, and then rise anew.  In one previous comment, I commended your rebound!

As for Being #1, and Above Myself for the year,  I once again, commend you!

However, your actions are not the norm.  U Rock!

Be careful, while you won the war, the Vooch may over turn you some day in battle, SunTzu.

Best Regards and Happy Trading/Investing,
- Vooch  ;-)

I hope you do overtake me!

Sun Tzu:

I like your point about diversification pundits being too dogmatic. What is the purpose of diversification? The answer is that it eliminates (or at least reduces) business specific risk, leaving only systemic risk. What if systemic risk is intolerably high? You might welcome business specific risk to replace it. After all, if you are a skilled and assiduous researcher, you might be able to more accurately quantify the business specific risk than the ivory tower models that consistently fail to capture reality.

It will be fun to compare my portfolio pelcmarek (commodity) with my other portfolio pelcmarek2 (almost no commodity) in the long run.

Happy investing !

Good on ya! It's nice to see somebody is profiting from this market (aside from the quants).

SunTzu

SunTzu,

That was a quick recovery!

Congrats, you've got the baton now.

- Vooch

As you know, I take way too much risk. I'm sure a little prudence would have allowed me to keep the baton. Let's see if I learn from my mistakes!

SunTzu