Advantages of Time arbitrage
·
Time arbitrage is the advantages from buying
good companies with rising profits at discount prices, and then wait patiently
for share prices to rise (i.e., time is your ally).
a. However,
if you buy a company that is eroding in value, and hope for good news to give
the shares a boost so you can sell it, time is probably working against you.
b. I
like to get paid while I’m waiting. Look for value first
and dividends second. Specifically, look for companies with a history of
raising their dividend each year.
c. Current
payments to shareholders and the companies that pay them are a great example of
the knowable. As an investor, that’s where you want to be.
·
Have a 3-years mindset:
a. It
takes patience and a willingness to hold on to great
companies that may appear to be going nowhere for what may seem like a long
time.
b. Having
a three-year mindset prepare you for
patience in an investment world obsessed with short term excitement.
·
The three forces that create fallen angels:
a. Business
and economic cycles.
b. Recoverable
calamities (i.e., short term events that cause panic).
c. Broader
market downturn (i.e., widespread panic).
·
Watch for extreme prices – they are not likely
to remain that way.
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