On Investing

Over the last 3 years, I have been an avid follower of the markets, more precisely the stock market. In my opinion, it is one of the most dynamic and exciting part of the business world, namely because everything that happens is an input in its valuation. During that period, we have obviously experienced one of the worst recessions due to the sub-prime mortgage crisis. This crash caused a lot of people to exit the market from an investment perspective, however for good or bad this is a market that doesn’t quit. That being said in 2009, we have experienced one of the most impressive rallies in the last few decades. Below is my key personal lesson learned from that period.

If I had to summarize my view on stock market investing into one word, it would be: discipline. Investing in the stock market requires great degree of discipline. Discipline to always think rationally especially when everyone around you is not.  Discipline to identify what news/factors should be considered when making buying/selling decisions. Discipline in buying and selling in increments to reduce the risk of doing so at the wrong time. Discipline in buying stocks based on certain hypothesis, and re-evaluating these hypothesis on a frequent basis to ensure that they hold, and in case they don’t the discipline to dispose of them.

This post is the start of a chain of posts on investment, which I hope you find interesting. It is inspired by one of my esteemed mentors in that area: Jim Cramer. His books, and TV show: Mad Money are worth every minute and penny. To follow my latest investments and my current positions please visit my Seeking Alpha profile: http://seekingalpha.com/user/482536/profile.

Regards,

Omar Halabieh

Review – The Big Short: Michael Lewis

This book should be rated 6 stars if such rating existed. Michael Lewis manages to top his masterpiece Liar’s Poker with an even more thrilling account of the events that led to the recent financial crisis. Although most of us are aware of the fundamental cause of the crisis being the sub-prime mortgages, this book sheds light on the pivotal role that the rating agencies played in creating it. Michael presents the events from both angles, the entities that were long and the shorts who were betting on the melt-down of the financial system. Through reading this book, one does not only learn the events, but learns how to analyze like the financial managers on Wall-Street. This book can be viewed as an investor’s guide to irrational market. Michael does a great job at the end to relate this piece of work to Liar’s Poker and to show how what he talked about then, came to life now in the form of a crisis. One quote I particularly enjoyed is:

“The line between gambling and investing is artificial and thin. The soundest investment has the defining trait of a bet (you loosing all of your money in hopes of making a bit more), and the wildest speculation has the salient characteristic of an investment (you might get your money back with interest). Maybe the best definition of “investing” is “gambling with the offs in your favor.”

In short, if you wanted to read one book to truly understand the financial crisis, this should definitely be the one. Highly recommended!

Regards,

Omar Halabieh