Imagine strolling through your favorite supermarket on a Sunday evening after finishing a game of soccer with your friends. You're worn out, hungry, and the air is filled with the tempting aroma of freshly cooked pastries. As you pass the second vendor he is frying up some crackling crispy pork, your mouth waters at the thought of biting into it. Your stomach is screaming "Yes!" and before you even have a chance to weigh the pros and cons, you find yourself buying some. This instinctive, visceral response is a prime example of the affect heuristic, a mental shortcut that [...]

It’s not often I get that lump in my stomach but yesterday it happened. Assertio Holdings, an investment of mine, had a stellar first half of the year. They were cheap, growing, and just closed a deal reducing their risk and adding a potential multi-billion dollar product to their repertoire. As I sat down to listen to their quarterly update, out of the corner of my eye, I saw a flash of red, Assertio's stock price plummeted. The market had just closed and their share price was down almost 40%. It must be a mistake I thought, so I looked [...]

At HIT Capital, our stock picking process begins with filling the top of the funnel with as many stocks as possible. In 2014, I started value investing with data on 2000 stocks, and now nine years later we are up to 42,280. As I look back and review the path we took to get here, two primary and intertwined hurdles jump out, overcoming the mere-exposure behavioral bias and learning how to code. In 2013, the subset of 2000 stocks I was using were the same ones utilized in most of the equity mutual funds and ETFs listed today. They [...]

When reviewing the stock market to gain insights into the future I prefer to use two tools or let's say lenses. The first lens is a magnifying glass of which I attempt to see what the market is doing today, tomorrow or next week. The second lens is a set of bifocals of which I use the magnifying portion to focus in on the market's value today, and then with that knowledge I look up through the distant lens to see the market further out. Magnifying Glass What is the market going to do today, tomorrow, or next week? This [...]

We learned in the last post on the Dunning Kruger Effect that our knowledge does not necessarily track our confidence.  My knowledge of the unknown is limited and therefore I’d prefer to be prepared for the unexpected.  Is that even feasible?  Let’s dive into the ultimate unknown, our own and others' ability to stay alive.  None of us think we are going to die tomorrow but there are a number of known and unknown risks that could wipe us all from existence: nuclear war, asteroid collision, volcano eruption, a rapture, global warming, a black hole, or something we haven’t had [...]

A little over a year ago, if you would have asked me about a European war, I would have betted against you and in reality I did.  I had multiple investments in Russian run businesses and today I have none.  As information became more readily available, the unknown risk transitioned into a perceived risk and now has become our reality.  How can we plan for future unknown unknowns like the war in Eastern Europe? Acknowledgement The first step is acknowledging that you don’t know everything.  Our Society and culture help us out by humbling “know-it-alls” fairly quickly.  But what about [...]