Consider External Factors and Competitor Actions for Accurate Forecasting and Decision Making

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Forecasting should consider external factors like weather and the actions of competitors. Having slack in the forecast can account for unexpected events. In competitive industries, it's common for competitors to cut prices, and management should not be surprised by this. Constantly using different excuses for poor performance is not acceptable. Long-term investors can tolerate short-term setbacks, but in a hedge fund specializing in special situations, it's crucial to avoid stocks with consistent poor performance and focus on buying stocks that show growth potential.

Kyle Grieve chats with Stephen Clapham about how to use “laterals” to leverage your circle of competence and find great ideas, simple ways to test your investment hypothesis, methods to reduce your exposure to investing frauds, the importance of investing in businesses with properly incentivized management, why you should pay close attention to the value a business's debt, the role that stock charts can play in a fundamental investors toolbox, the power of simplicity in valuation, and a whole lot more!

IN THIS EPISODE, YOU’LL LEARN

00:00 - Intro

01:54 - How to detect frauds.

04:55 - How to find interesting ideas in different geographies.

11:31 - How to utilize your friends as an investing filter.

17:42 - How charts can help you identify great opportunities even if you are a fundamentally focused investor.

18:16 - The importance of market perception.

25:16 - Management red flag.

31:34 - Why you should place a heavy emphasis on back-of-the-envelope evaluations.

35:24 - Why it’s important to have the skill to detect frauds.

41:01 - The pitfalls of ESG investing.

46:30 - The best ways to build investing skills.

And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

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Check out the books mentioned in the podcast here.

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