About qualitysharesurfer

UK based private investor sunlighting as a competition economist

Trade bores

After a roaring April with double digit gains, so far May has been rather more frustrating. I have three things to thank for this: one, the rekindling of the US China trade war; two, an analyst note questioning the accounting of what was my largest holding, Burford Capital; and three, a chest infection that’s taking its sweet time to get better. None of these issues seem worth getting too bothered about in the long term, but that doesn’t stop them being a source of frustration right now.  Continue reading

What drives share prices?

This post is inspired by reading George Soros’s paper on reflexivity.  I’ve taken the basic idea but then applied it to investing in a different way to Soros. The result is that I end up writing about a something a bit different. The implications are fairly intuitive and I think crucial to understanding why markets behave the way they do. This post is more abstract conjecture than practical advice, but hopefully I’ve managed to come up with something that manages to be thought-provoking but accessible. Continue reading

JD bought

Everything seems to be looking up in the markets at the moment, at least it does from my particular vantage point. My portfolio has risen pretty relentlessly so far this year and is almost back at its all time highs, something I  didn’t expect to happen nearly so quickly back at Christmas time. Many of the other investors I follow on Twitter have also been posting high-teen YTD returns or better (well done if that’s you). As I mentioned in my recent portfolio review, I think the macro picture currently seems fairly benign for investors in high quality equities. What could go wrong I wonder? Continue reading

Portfolio review: April 2019

The last three months have seen a fairly spectacular bounce in many stock markets across the world. After the US markets had their worst year since 2008, they’ve now had the best first quarter since 1998. The S&P 500 is up almost 15% so far this year. The UK markets are not doing quite so well but have still seen a pretty decent bounce. My portfolio has had a fairly satisfying bounce along with everything else, benefiting significantly from its exposure to US Tech but being held back a bit by ‘air pockets’ in some of its smaller AIM investments. Continue reading

Do acquisitions really destroy value?

This post was prompted by an article I stumbled across, describing a recent presentation by Aswath Damodaran. I found a version of this presentation here, though this version may well be a bit out of date. In it, he argues that there is clear evidence that acquisitions tend to destroy value for the shareholders of the acquiring business. I’ve heard this plenty of times before but haven’t thought much about the consequences for my own investments. On reflection this seems negligent. Base rates matter. I should really have a better idea of what the evidence actually says.

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Dog’s breakfast

The latest round of Parliamentary voting on Brexit has left the ultimate outcome entirely unresolved, with two weeks to go before we are due to leave. All possible outcomes are still on the table. This includes not only the indeterminate extension to Article 50 that has been voted for but also Theresa May’s deal, which refuses to go away despite it being resoundingly rejected twice by some evidently not-so-meaningful votes, and no-deal, which remains the default despite Parliament voting against it. Continue reading

Impulse control

I expect you’ve heard of the Marshmallow Test. It’s the one where you leave a four-year child alone for a few minutes in a room with a marshmallow on the table, promising further rewards if they can restrain themselves from eating it. After initially trying to hold out for the reward, most four-year-olds find the immediacy of the marshmallow too much to bear. The interesting part of the original Marshmallow Test, carried out in Stanford in the late 1960s, is that the children who gobbled up the marshmallow generally went on to do worse in life according to various measures. Like many psychology experiments, there is a fair amount of controversy around what the Marshmallow Test actually shows. It could demonstrate that an ability to be patient and exercise self-control is a crucial life skill, or alternatively it may be that some other unobserved factors were at play (e.g. socioeconomic background, intelligence, trust). I don’t think it takes a huge leap of faith to believe that patience is an important life-skill. One area where I’m pretty confident that gobbling up marshmallows is likely to cost you is in investing. Continue reading