If you are like any other do-it-yourself individual investor, you would have been through this dilemma. When should I initiate a position? As per our individual investing style, criteria and risk profile, we have done our due diligence and come up with price that we are ready to pay. Now if we are in bull market, we do not hesitate and take a plunge. However, if we are in the bear market (like these days), then we hesitate to initiate our position. We start contemplating, should we wait a little bit more? This dilemma is more in case of dividend investors because YOC is sensitive to initial yield.
I have been through this dilemma quite often. Let is think this through with some rational reasoning.
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Measuring the Performance of the Ivy Portfolio
(Phil’s Stock World, 12/1/12)
Investing in Secondary Markets
(Investment U, 2/2/12)
Investing in Alternative Assets
(Investment U, 2/3/12)
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Portfolio Management Process – Goldratt’s Way
Have you ever noticed that many times and perhaps on many occasions, we do things, or we respond certain situations, or the way we manage certain things, it may be reflecting how we really think. Even if we are not able to express it precisely we naturally tend to do things in a specific way. Conversely, it could also be due to our educational or experiential background.
The foundation of my educational background is in industrial/manufacturing engineering. Any industrial engineer in United States will know about a little book titled “The Goal”. It is written by Eliyahu Goldratt. It is written in a novel based story format. During the course of this story, Goldratt introduces the concept of “Theory of Constraints”. He intertwines the concepts with daily life events. When Goldratt introduced this book (and hence theory of constraints) in early 90s, management consultants recognized its significance and applied at hundreds of manufacturing organization across of board. continue reading rest of the article….