Philosophy

Here's how I think about it.

Buy broad investments and hold them for years. It's boring. Boring works. It has been shown to make money over the long run.

The fun bit is calling the short-term wobbles. Markets overshoot, people panic or get greedy, and things that went too far tend to come back. Spotting that is the game I play here, every morning, out loud.

Leverage is like chilli: it cuts both ways, and too much burns you badly.

A few things I try to stick to

• Long-term holding is the base. Short-term calls sit on top and never replace it.
• Say when I'm wrong. Every call gets marked, and old ones never get edited.
• Things tend to come back to normal. Markets overshoot both ways, then drift back. That's most of what I look for.
• Steady beats spectacular. Leverage makes losses bigger as well as gains, so I'd rather be roughly right often than spectacularly right once.
• Leveraged bets are only for money you could lose entirely.

Two lines I like

"It will fluctuate."What the quote means Uncertainty: share prices naturally go up and down over time. Normal behaviour: short-term swings are a permanent part of markets, not a sign that something has broken. Long-term perspective: big indices have historically trended up over long periods, despite the constant daily and monthly ups and downs. Sources: Merriam-Webster · Cambridge Dictionary · Minchin Moore · Fidelity · Morningstar

J.P. Morgan (attributed)

"Mean reversion is one of the great truisms of capitalism."What the quote means Who said it: Anthony Bolton, a well-known UK fund manager who ran Fidelity Special Situations for 28 years, from 1979 to 2007. He was a contrarian, someone who goes against the crowd, and he bet that extremes don't last. What it means: prices, company values and profit margins that get stretched tend to drift back towards their long-run normal over time. What goes up too far tends to come back, and the same goes the other way. Sources: Investing Against the Tide (book) · Wikipedia

Anthony Bolton

In plain words: what goes unusually far one way usually drifts back towards normal. That's the idea behind most of my short calls.