Max King


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Max King manages the Piccadilly Growth Trust, Capital Opportunities Trust, and an emerging companies OEIC for J.O. Hambro Capital Management. Prior to that he spent 10 years building Finsbury Asset Management, a derelict investment trust group , into one of the best performing and most successful independent boutiques in London.

General principles and politicians ' promises

  1. Fight the consensus, not the fundamentals.

    The true contrarian does not oppose the consensus for the sake of it, but because the herd has charged in the wrong direction.

  2. Nobody waves a flag at the top (or the bottom) of the market.

    Don't expect a clear signal when the market or the price of an individual stock is about to change direction. The reason why such a change happens is only obvious with the benefit of hindsight: at the time, being a contrarian is lonely . This particularly applies to brokers ' analysts, who rarely risk their reputation by recommending a purchase or a sale until the price has moved 50%.

  3. Don't fight your prejudices.

    They may be illogical and wrong, but you will never be happy with an investment decision that goes against a prejudice. Like superstitions, they are often based on fact.

  4. 'It is not strength that determines the survival of the species, or even intelligence, but ability to adapt to change.'

    This is a quote from Charles Darwin, and it applies very well to investors. Good fund managers do not stick rigidly to a style or a strategy, but are able to adapt when the need arises, sometimes even reinventing their whole approach.

  5. 'History repeats itself first as a farce, then as a tragedy.'

    This is a quote from Marx, although Mark Twain's observation that 'History doesn't repeat itself, but it rhymes' is equally good. If you want to predict the future, look to the lessons of the past.

  6. Don't confuse brains with a bull market.

    Everybody makes money in a bull market, and just because that includes you doesn't mean you are a skilled investor. Likewise, it is important not to let your analysis of a company's value be influenced by its price movement, particularly if you own it.

  7. Keep your distance from management.

    Managers are always biased to optimism about their own companies, because they are locked in by their jobs. Investors can afford to be objective, because they don't need to own the stock, and their perspective compensates for their lack of detailed knowledge. Meeting management is useful, but you have to be sceptical and you have to make up your own mind.

  8. The graveyards of Wall Street are filled with people who were right too soon.

    Timing is critical in investment, and being too early can be almost as unrewarding as being wrong. However, Rothschild's answer to being asked the secret of his success - "I never buy at the bottom and I always sell too soon" is also worth remembering, particularly the emphasis on selling on the way up, not the way down, which most analysts forget.

  9. A long term investment is a short term investment which has gone wrong.

    This is a trader 's dictum, not an investor's, but it is still useful. It is always tempting to hang on to shares which have gone down in value, but recovery happens for a reason, not by some law of physics. The quip is a handy way of responding to ignorant people who try to distinguish between long term investment (good) and short term investment (bad).

  10. Don't invest in politicians' promises.

    Politicians love making promises to ' encourage savings', 'promote investment in transport infrastructure', 'put more resources into education and training' etc. However, these promises are often abandoned , countermanded by a contrary objective or merely empty, so that politicians regularly achieve the opposite of what they intended. Making an investment in a supposed beneficiary of a government decision is highly dangerous, because helping private sector companies make money is bottom of any government's list of priorities, while getting them to spend money on the government's behalf for no return is pretty high up.

www.johcm.co.uk



Global-Investor Book of Investing Rules(c) Invaluable Advice from 150 Master Investors
The Global-Investor Book of Investing Rules: Invaluable Advice from 150 Master Investors
ISBN: 0130094013
EAN: 2147483647
Year: 2005
Pages: 164

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