The Rules of Investin‪g‬ Livewire Markets

Most equity investors would advocate holding a highly diversified portfolio of 20 to 50 stocks, looking to reduce risk and bring returns closer to that of the index. But this attitude misses a key fact, according to Bob Desmond from Evans and Partners - volatility is not the same thing as risk. Instead, Bob prefers to own a concentrated portfolio of just 10-15 stocks, which allows him to focus on the best ideas.
"Good ideas are so rare that if you find a good idea, you should really concentrate your capital in it."
In this episode, we discuss investing during high inflation and some of the unexpected challenges this throws up, where he sees pockets of excess and where he's finding opportunities in equities, and why he thinks tech stocks still offer attractive returns.

Steve Johnson has built a reputation for himself and the team at Forager Funds for uncovering value in dark corners of the market. But in recent years, he’s learned the need for patience in this area, as extreme opportunities are not always apparent. That’s why, when markets are functioning normally, he keeps a core portfolio of high-quality businesses that he’s happy to hold. But when markets start to get dysfunctional, like in 2020, and prices depart far from values, this capital can be recycled into some of these opportunities for outsized returns.
In this episode of The Rules of Investing podcast, we discuss how he’s balancing the portfolio to ensure performance in the good times and the bad, why Uber is misunderstood, and he discusses some Australian turnaround stories that the market hasn’t yet woken up to.

A quick note to say thank you for listening this year and preview some upcoming content over the holidays.

Guest: Jun Bei Liu, Lead Portfolio Manager, Tribeca Alpha Plus Fund
After a tumultuous 2020, the world is (slowly) beginning to recover. With two successful vaccines announced, and the virus largely quashed in Asia and the Pacific, the time for ‘lockdown stocks’ is behind us, and the ‘recovery play’ has begun. But not everywhere is recovering at the same pace. While early progress from Europe’s lockdowns appear positive, the region has a long way to go. And the US has barely begun. Australia, however, is perfectly placed with the virus under control both locally, and in our biggest trading partner, China.
Jun Bei Liu, Lead Portfolio Manager of the Tribeca Alpha Plus Fund, reckons that Australian equities “are in a pretty sweet spot, compared to global.” With consumer and business confidence rising, the de-leveraging of household and corporate balance sheets, and historically low rates, all the ingredients are there for a strong performance from Australian equities.
In this episode of The Rules of Investing podcast, we discuss the re-opening trade and how to get exposure to it, how the ‘barbell’ approach helps to maximise returns while managing risk, and Jun Bei shares a high quality company she's recently added to the portfolio at a very attractive price.

Guest: Amit Lodha, Fidelity.
Identifying key global trends in business and investing requires an overview of the world that few investors can achieve. But with an army of Fidelity analysts at his back, and a truly global focus, Amit Lodha is uniquely positioned to spot and act on these trends. When searching for these trends, Amit wants to find keywords - what he calls his "anomaly watch". Six years ago, the keywords popping up on his anomaly watch were "personalisation" and "simplification". Those trends led him to investments in companies like Facebook, Apple, and Google.
More recently, the words that keep popping up on the anomaly watch are “collaboration” and “decentralisation”. In this episode of The Rules of Investing podcast, he explains the significance of these trends for the years ahead. We also hear about the time he met legendary investor Peter Lynch, and the lesson Peter shared with him.

When a stock has been in your portfolio for a while, it’s easy to get attached to the position and ‘anchor’ yourself to old information. In recent years, Simon Shields, Principal at Monash Investors, has shown repeatedly his willingness to change his view. He’s made money on both the long side and the short side on stocks like Kogan, Qantas, and Corporate Travel Management. So when I recently sat down with him for the latest Rules of Investing podcast, naturally, I wanted to know how he went about it. He pointed to three key “early warning signs” that he looks for that indicate it could be time to reduce a position:
A spike in short interest
An unexpected downgrade by the company (not by analysts)
When a company fails to meet their ‘signposts’ that are expected along the way.
He expands on all these points in this episode. He also shares an under-the-radar small cap that’s perfectly positioned for an outstanding 2021, and he nominates a controversial stock as one he’d hold if the market were closed.