This morning the Livewire team gave Forager a gong for one of 2016’s top performing stock ideas (Whitehaven Coal). While the sentiment is much appreciated, it is completely undeserved. Our typical holding period for a stock is three years. We buy shares because we think they are worth more than their trading price, and we wait for that value to become obvious to everyone else (assuming our assessment was right). When a stock doubles just three weeks after we bought it, it can’t possibly be because our assessment of it was correct. It is luck, plain and simple, and it can just as easily go both ways.
Recognising luck’s role is something we all tend to be good at on the downside. When a stock price falls, it is just the market being the market. When one rises, though, we tend to attribute the gain to our own brilliant insights and analysis. You can’t have it both ways and the truth is that, particularly in the short-term, lady luck has a bigger role to play than any of us would care to admit.
We will know in a few years’ time whether we were right to buy Whitehaven at $0.38. Until then, we have banked some lucky profits.
Our March Quarterly Report (now mobile friendly) discusses Whitehaven, as well as RNY‘s latest results (horrible), Service Stream (one we should get a gong for) and a new addition to the international fund, Baidu.
And don’t forget online applications are up and running (scroll to the bottom of this page). From start to finish in under 10 minutes and all electronic.
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Forager Funds is a boutique fund manager specialising in a value investing approach. We offer an ASX listed Australian Shares Fund as well as an International Shares Fund both aimed at delivering returns for long term investors.