A <em style="font-style: italic;">System</em> That Doesn't Miss High Flyers - Views on News from Equitymaster

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The Equitymaster Research Digest

A System That Doesn't Miss High Flyers
Jan 31, 2017

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Our beat is hated stocks. But you already know that.

Every time a great business is hated or feared, we alert you. Our best picks tend to come when markets are in distress. Some of our biggest gainers were stocks others thought would disappear.

It's worked well for us...and for you too, dear subscriber. For value investing works best when everyone else in the market is fearful.

But does that mean we can't make money in an environment of greed? You have surely seen expensive stocks soar for months during euphoric times...and wondered why you were missing out on the profits.

Well, value investing has no room for greed. And there's no point debating or compromising on the principles we owe our success to.

But still - is that a reason to give up on the possibility of profiting from greed? Sure, we can't use value investing to find stocks here. And it may not be a great idea to bet on greed for the long term. Plus, you never know when the trend behind the greed will reverse. What we need, it seems, is a different approach. A novel approach. Not to replace value investing, but to augment it.

Turns out our biggest misses at the cusp of bull markets were because we lacked a system to tackle greed.

Take the case of Atul Auto.

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