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Monday, October 22, 2012

Shooting Stars...One has Flamed Out Already

On September 10 I discussed the phenomena of shooting star stocks and mentioned lululemon (LULU) as a candidate for that category. Here is the one year chart:

Another one that fits the mold is Chipotle. Those big lines at lunchtime dont always mean its a good investment....especially if too many people have reached the same conclusion.

Sunday, October 21, 2012

Words to Live By (Well At Least Your Investing Life)

Hat's off to Barry Ritholtz for his rules of investing
Here's some wisdom from his list:

Are you an active or passive investor: For the equity portion of your allocation, you must answer a crucial question: Do you buy indexes and garner market-level returns, or do you pick stocks (or sectors) and time the market in an attempt to beat the indices?
Those who try to beat the market have a tough road ahead: Each year, 80 percent of professional managers fail to beat their benchmark. Of the few who do, once you take fees and costs into consideration, less than 2 percent actually hit that bogey.
If you want to beat the market, understand the long odds that are working against you. That is why for most investors, indexing is a much better bet.
In conclusion, investors need to fully understand the challenges that face them: Capital markets are about making the best probabilistic decisions using imperfect information about an unknowable future.
Sometimes you have an embarrassment of riches to select from; other times you are choosing the “least-worst“ option. Either way, you will never have perfect information that allows you to bet on a sure thing. There is no magic elixir.