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Anthony Bolton's Investing Against The Tide

A Review Of Anthony Bolton’s “Investing Against The Tide”

The following review is straight from Operator Kean, a member of the Macro Ops Hub. To contact Kean, visit his website here.

Anthony Bolton is one of Britain’s most well-known investors. He’s managed money professionally for close to 3 decades at Fidelity Investments, and during his time as head of the Special Situations Fund, he’s averaged annualised return of 20%!

Bolton shares his wealth of experience in his professional self-styled journal titled Investing Against The Tide. Forwarded by well-known investor Peter Lynch, a long-time colleague of Bolton’s, the 200+ page book reflects Bolton’s investment philosophy and practices.

While the book isn’t as light a read as Scott Fearon’s Dead Companies Walking, I found it to be more valuable from a practical perspective. Bolton not only shares his experiences, but his conceptual investment framework as well.

The book is split into 2 parts. The first is titled “principles and practices from a life running money”. The second is titled “experiences and reflections from a life running money.” The former covers the ‘how and what’ of Bolton’s investment framework, while the latter is more introspective, with commentary on the ups-and-downs of his investment career.

The first part includes:

  • What to look for in management
  • Developing an investment thesis
  • Gauging market sentiment
  • Constructing a portfolio of shares
  • Assessing the financials of a company
  • Understanding valuations
  • Technical analysis and the importance of price charts
  • Market timing

These sub-chapters are brief (some barely 2 pages long), with Bolton offering his take on what to look for during the investment process. Given that bottom-up fundamental analysis can be quite complex, workable ‘Occam’s Razor’ parameters are needed for decision making.

The second part of the book covers:

This is the section where Bolton reminisces about his career, including his own mistakes and what he sees as the future of the industry.

Bolton also shares 12 attributes needed to be successful in the markets:

One interesting part of Bolton’s strategy is his use of technical analysis. Not many fundamental bottom-up stock pickers are known for calibrating their investments with technical analysis. Bolton explains:

The way I look at technical analysis today is as a framework or overlay into which I put my fundamental bets on individual stocks. I see it as a discipline for my stock picking. What I mean by this is that, if the technical analysis confirms my fundamental views, I may take a bigger bet than I would do otherwise. However, if the technical analysis doesn’t confirm my fundamental positive view, it makes me review my investment thesis on a company, for example checking that there aren’t negative factors we have overlooked. If my conviction is very strong I will often ignore the technical view; at other times if it conflicts I will take a smaller bet or reduce my position…

… I look at the technical situation as a summation of all the fundamental views available on a stock at that particular moment and it can sometimes be a warning signal of problems ahead. In a world where every professional fund manager knows that at least two out of five share picks they make will not work out as they hoped this is very useful…

… One of the great disciplines of technical analysis is that it forces you to cut losses and run profits – something that’s always easier said than done. Although at heart I’m a fundamentalist I have definitely found that the combination of two approaches seems to work better than just one on its own. A few years ago I spoke at a technical analysis conference and said that if I was on a desert island and was only allowed one input for my investment decisions, it would be an up-to-date chart book. I think today I would still be of the same opinion. The trouble with fundamental data is that I can’t single out only one source that on its own would be sufficient. I could, if pushed, run a portfolio with just a chart book – although on a desert island, it wouldn’t be high up on my list of survival items.

So who says technical analysis is voodoo?

Bolton’s book is great for long-term equity investors, particularly for those who are value-oriented. I’d rate it a 4 out of 5.

To learn more about our investment strategy at Macro Ops, click here.

 

 

A Review Of Lawrence Creatura’s “Long and Short

A Review Of Lawrence Creatura’s “Long and Short: Confessions of a Portfolio Manager”

The following review is straight from Operator Kean, a member of the Macro Ops Hub. To contact Kean, visit his website here.

Lawrence Creatura recently shared his insights from over two decades of investing in markets. The following are my takeaways from Long & Short: Confessions of a Portfolio Manager.

Identify Your Comparative Advantage

Creatura advises that investors understand their edge. This point is similar to Warren Buffett’s advice about knowing your ‘Circle of Competence’ — finding what you’re really good at and being aware of where that boundary/circle ends. Creatura writes: Read more

A Comprehensive Reading List For Global Macro Traders & Investors

A Comprehensive Reading List For Global Macro Traders & Investors

The successful macro investor must be some magical mixture of an acute analyst, an investment scholar, a listener, a historian, a river boat gambler, and be a voraciousreader. Reading is crucial.

~ Barton Biggs

After being asked countless times about the best books to read when it comes to markets and trading, I finally decided to create a comprehensive list.

I’ve read hundreds of books on trading, markets, economics, history and psychology over the years. And even now I still try to read a new one every two weeks. Reading is not only vital to developing yourself as a trader, but also as a person who’s able to get what they want out of life. Read more

Dead Companies Walking

A Review Of Scott Fearon’s “Dead Companies Walking”

The following review is straight from Operator Kean, a member of the Macro Ops Hub. To contact Kean, visit his website here. Read more

How to Make Money with Global Macro

A Review Of Javier Gonzalez’s “How to Make Money with Global Macro”

The following review is straight from Operator Kean, a member of the Macro Ops Hub. To contact Kean, visit his website here. Read more

Adam Smith Book

Lessons on Trading and Markets from “Adam Smith” And The Money Game

If you’re wondering why “Adam Smith” is in quotations, it’s because the name is the pseudonym adopted by the author who wrote The Money Game, a 1967 market classic. In the author’s own words, the book is about “image and reality and identity and anxiety and money” —  everything that makes up markets…

Here’s some of “Smith’s” teachings: Read more

Diary Of A Professional Commodity Trader

A Review Of Peter Brandt’s “Diary Of A Professional Commodity Trader”

It’s a rare opportunity to get an inside look at the trading process of a legend. But that’s exactly what Peter L. Brandt (PLB) provides with his book Diary of a Professional Commodity Trader: Lessons from 21 Weeks of Real Trading. Read more

Palindrome Ahead Of The Curve Book Review

Soros On Soros Review: A Peek Into The Mind Of The Palindrome

Soros on Soros: Staying Ahead of the Curve is one of three books every aspiring trader needs to read; the other two being Reminiscences of a Stock Operator and Market Wizards (the original). George Soros, nicknamed the Palindrome, because his last name is the same forward and backwards, is arguably one of the greatest traders of this generation.

While managing the Quantum Fund, Soros realized astronomical returns for decades (averaging over 30% a year).

Soros has authored numerous books on topics ranging from philosophy, government, globalization, and of course, trading. Soros on Soros is the second of his two written on trading.  I refer to Soros on Soros as being The Alchemy of Finance-lite. Read more

The Art Of Learning by Josh Waitzkin Book Review

Learning and Constant Evolution (“The Art of Learning” Book Review)

“Evolution, Morpheus, evolution” – Agent Smith, The Matrix

I’m a performance nut.

Whether it’s trading, endurance racing, rock climbing, ju jitsu, or anything else. It doesn’t matter. If I’m doing it, then I’m obsessing over performance — and going to extreme lengths to improve and be better than the next.

This is why trading and investing appeals to me. I like challenges. And there are few games more challenging than the markets. 

A big part of what we do at Macro Ops is study other top performers.  Read more