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Andrew Schneck
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I am a value investor focused on misunderstood securities and industries, with an eye for long-term stock ownership. I am a big fan of Joel Greenblatt's special situation investing, Berkshire Hathaway's focus on high quality enterprises, David Einhorn's shorting and accounting scrutiny, Bruce... More
  • Some Thoughts on Behavior 3 comments
    Dec 24, 2010 1:59 PM | about stocks: HALL

    I am, by nature, an unemotional individual (I've had people tell me I'll never get married, or that if I do, it will be for convenience and not love).  Day-to-day, I have less mood swings than most people I know, and very rarely do I have those "bad days" that everyone talks about.  It's all pretty much the same to me.

    What I've seen though, after an investment in a company, my behavior will change.  I will naturally think about that business a lot more after my purchase than before.  Any shreds of doubt I may have had before become major concerns once I am a business owner.  This forces me to read & dig much further into the company I own.  That trust preferred security I didn't know the details on or the rights offering that occurred six years ago suddenly become more important than eating or sleeping.

    The true eye-opener is when I need to check the stock price more than once or twice a week.  Why would I need to know how much my farm is worth on a daily basis?  Well, the answer would be that I don't really know everything about the farm.  Perhaps there is that fence around the pasture I didn't inspect too closely, or I forgot to look at historical weather patterns in my region.  Whatever the reason, my mind is not at ease.

    It is in these situations in which I know I didn't complete my work.  During my research, I missed something and I can't allow it to slip my mind until I have the facts straight. It is only once I have dug up all the facts that my mind is back at ease.

    I would recommend doing your research and writing all your thoughts down in an article before making any purchases.  It will force you to get your views of the company fully straight.  This is the great thing about my blog- not only can I share my ideas with the world, I can also help get my thinking straight.

    Recently, I re-sized a position in my portfolio. I am new to the insurance industry and I had initially placed a 20% investment into Hallmark Financial.  This investment was well-researched and I have no worries about the company's future.  However, I did have some concerns regarding the size of the holding.  I could have easily missed something, either with the company or the industry at large.  I just started learning about insurance two weeks ago and I am by no means an expert.  This position was something on my mind since the day I purchased my stake.  After my position re-sizing (down from 20% to 14%), my mind has been at ease.  It seems my subconscious knows when I've become too greedy or when I've rushed into something before I know enough about it.

    This "need" to check stock prices could be considered a warning sign of speculation.  If you cannot survive without checking the stock price regularly, your method must be flawed.  You are depending on someone else's opinion (Mr. Market), rather than your own, to determine whether you've made a good investment.

    I'm curious whether I'm alone here- has this happened to you before, with either the business or the size of the holding? Have there been times when you needed to check the price of any particular holdings regularly to ease your concerns?

    Full Disclosure: I own shares in HALL

    Stocks: HALL
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Comments (3)
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  • Zzan
    , contributor
    Comments (9) | Send Message
    I am also a student and am learning about investing. I noticed you are a have a "value investing" approach and you are often referring to Graham and Buffett. Well with your detailed analysis you are definitely in front of me.


    I also noticed that psyhological factor is very inportant. By nature I am more come and not of quick temper, but reading about right behaviour of investor and rationally accept it as a philosophy is something totally different than actually control your own emotions when you own some stocks and watch markets with all the news.


    Probably Buffett is not a good comparison, because he already has his billions and many years of experience that makes him confident. I hope after 10 years, some bull and bear markets, a crash and a good record, emotions will be under control till than I need constantly revise basics ideas of right behavior.


    Good articles, writing down thought for your self is really a good idea. Good lock.


    27 Dec 2010, 05:27 PM Reply Like
  • Zzan
    , contributor
    Comments (9) | Send Message
    calm not come
    I am more calm...
    27 Dec 2010, 05:31 PM Reply Like
  • Andrew Schneck
    , contributor
    Comments (63) | Send Message
    Author’s reply » zzan, thank you for the nice comment. If you have any questions as you continue to learn about investing and developing an approach, feel free to reach out- I enjoy interacting with people. My email is listed on my profile, as is my blog website where I post all my research & ideas.


    I'd say the psychological aspect is the most important part, as it is the thing that seperates man from beast. All the emotion running rampant on Wall Street is somewhat like an unorganized zoo of wild animals. Behavior is something you will notice that happens naturally as you begin to make your own decisions on investments. I started out buying into the same companies as Buffett without valuing them (it was almost like cheating!) and I felt safe, but the real test is placing bets on your own research.


    One person you may want to follow is Ravi Nagarajan- I find him to be one of the best on the Internet. He runs
    28 Dec 2010, 12:26 PM Reply Like
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