Stay as unemotional as possible when things go against me.
Use Compustat and Zacks to screen U.S. and Canadian stocks. Look for obscure companies or niche business inside a company.
Market cap is not a factor. Strategy is buying a company at a discount to intrinsic value.
Non-finance companies: Low multiples of EBITDA, low multiples of free cash flow, low P/E ratio, and high EV/EBIT (cap rate).
Finance companies – Low price/tangible book value, low P/E ratio, high tangible common equity/total assets
Focus on easily understandable business, business that can be acquired, and provide a necessary service or product.
Stay away from companies that can’t grow their cash flow and increase intrinsic value.
Watch various economic statistics, including more esoteric data such as weekly rail car loadings. When the data points to a slowdown or stock is fair valued, get out.
Need a method that suits own personality
Market is not going to let you make any money unless you’re willing to take risk
Perseverance and the emotional resilience to keep coming back
Stable earnings can mean manipulating the numbers.
Positions that were highly liquid, so that we could exit the market quickly
Being long options. Long straddles and strangles in currencies for FX volatility.
Higher rates when everything about the economy was signaling that you were in a bubble.
Trades interest rate markets or FX
You need to be early to make money in bubbles.
Tops are messy, and the reversals in bear markets are horrendous.
LIBOR rates spiked. Money market liquidity dried up
Typical time horizon for trades is one to three months
Exponential price rise is characteristic of the late stages of a bubble