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Brian Bain
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Brian is the founder and lead writer for INVESTOR IN THE FAMILY LLC and All-Star contributor at Scutify. At INVESTOR IN THE FAMILY LLC (, Brian maintains an active portfolio for subscribers in addition to publishing research for readers on Seeking Alpha. His focus... More
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  • #8: The Investor's Greatest Enemy: Impatience

    Two of the greatest mistakes an investor can make is to make a bad investment and to sell an investment too soon. I won't go into the problem with making a bad investment, I hope the danger there is self-evident. The danger of impatience is much more sinister though.

    As I look back on my investing career and wonder about things I could have done differently, the most significant thing I would change would be to show greater patience. This is true on both the front-end of making an investment, but also on the back-end when selling.

    The danger on the front-end is to rush into an investment before doing the proper due diligence. Showing greater patience and avoiding the fear-of-missing-out would save many of us some heartache.

    The danger on the back-end is not always as obvious though. In a world where information is fast and plentiful, it can cause us to want bigger results, faster. When we check out portfolio and read news daily, it seems like more time has passed than really has. We can forget that investing is a process measured in years, not days and weeks.

    I can look back on many investments where I have sold at a loss or missed out on notable gains, simply because I became impatient and became tempted by "the next great thing." I left one investment too early to move onto another where I would likely do the same.

    The takeaway from this is to know with conviction why you are making an investment and to not sell until something has changed on a level significant enough to alter your initial conviction. This discipline and patience will serve you and your portfolio well.

    - Brian

    Mar 03 10:11 AM | Link | Comment!
  • #7: Short-Sellers And Bear Raids

    With the 20%+ drop in Exact Sciences (NASDAQ:EXAS) over the past week or so, there have been many comments and questions regarding the role of short-sellers and even a "bear raid." This has led me to want to process through these factors a bit more.

    I have read some commenters who say that short-sellers always have great reasons and are impossible to beat. Both of those points are absurd. I have no doubt many short-sellers are very skilled at what they do, but so are "normal" investors.

    It does seem that short-sellers, if they have enough critical mass, can certainly exert notable influence over a stock's price. The thing to remember though is that they have no power over a stock's value. The value of the company and the price of the stock are not the same thing. Our goal is to identify value and a discount price. If we find a company with fundamental value that we believe in, short-sellers may be able to manipulate the price for a while and may be able to even drive it down for some time. Even so, if the fundamental story does not change, value with show through in the end.

    Does this mean short-sellers are irrelevant? Certainly not. If a company has a large percentage of stock sold short, the short-sellers must have some strong reasons for their position. We would be wise to investigate their view and see if perhaps our view on the company needs to be revised. If our view of the fundamental value and potential of the company can survive the scrutiny of a short-seller argument, we have all the more reason for confidence in our investment.

    The biggest thing to keep in mind for companies with a large short-seller position is that you could experience some notable "pain" in the short to near-term as the stock price could face downward pressure and overall volatility. This means shorter-term options are probably not a good idea.

    As for bear raids, these are officially illegal but can be identified most notably by some form of "smear" campaign against a company. Due to the illegal nature of a bear raid, you can expect the methods to be especially subtle and deceptive. A distinctive point to look out for is how much of the critiques being laid are factual or merely conjecture, perception, or even just slanderous. The key is to look for verifiable and factual information in the critiques. If it is absent and most of the negative comments lack substance, the likelihood of a bear raid is very real. In the event of a bear raid, re-evaluate the fundamentals and respond accordingly. We invest in the long-term and short-term noise like this will eventually sort itself out.

    Stay smart and stay grounded.

    - Brian

    Mar 03 10:07 AM | Link | Comment!
  • #6: Never Make Impulsive Decisions

    Never buy until you know why and never sell until the story has died.

    Always have a strong, defensible reason for every investment you make. Always revisit your reason for buying the stock before you sell it.

    It can be a great practice to wait at least a full day before taking action on any investment idea.

    Invest based on fundamental reasons, not hunches, excitement, or fear.

    Short and sweet this time, just some basic reminders to stay disciplined.

    - Brian

    Mar 03 10:03 AM | Link | Comment!
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