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How to Be a 'Connoisseur of Extremes' - Views on News from Equitymaster
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The Equitymaster Research Digest

How to Be a 'Connoisseur of Extremes'
Jul 12, 2016

  • An eye for detail
  • A niche subset of investors
  • Bad bank, good bank

They teach us to be disciplined. They train us to pay attention to the details. They help us control our egos and let go of emotions. Indeed, they show us our true selves.

Yes, stocks do all of that. Not to mention help us create long-term wealth!

I list these qualitative virtues of stocks because only a few people go on to become their true connoisseurs. But today I will talk about a specific type you wouldn't have come across earlier.

It's true that making money in stocks isn't child's play. But there are different ways of doing it. The brokerages, business papers, and mass media make it sound overly simplistic.

Making money off a stock tip can be a one-off. One needs the firm backing of lady luck to do it consistently. The other approach is to patiently study fundamentals and valuations to arrive at the best and safest bets. The longer you hold the investment, the better your chances of making money with this approach.

But only a select few investors have a real eye for detail. They do not ignore moat or management quality. They are more aware of the long-term fundamentals of the businesses they are investing in than anyone else. And they never lose sight of valuation risks.

But they also look into factors that the broader market overlooks. Their eye for detail can be extreme. Indeed, you could call them 'Connoisseurs of Extremes'.

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