Avoiding biases in your investments

Patrick Poke

Livewire Markets

One way we can help reduce our susceptibility is by maintaining a valuation on our investments. Valuations don’t require high levels of complexity, in fact, simplicity can be a virtue as it reduces room for error. In my own process, I use valuation to serve a number of purposes:

  • Identifying a point of entry and exit for a position
  • It gives me something to hold onto when prices fall
  • The process of valuation forces me to complete appropriate due diligence
  • It acts as a bridge between the story of a business and the numbers in my model

 

There are many different approaches to valuation, each with their own merits and shortfalls. If you’d like to learn more about valuation, Monash Investors have prepared an excellent guide to pricing and valuing stocks, which you can access here:  (VIEW LINK)


Patrick Poke
Managing Editor
Livewire Markets

Patrick was one of Livewire’s first employees, joining in 2015 after nearly a decade working in insurance, superannuation, and retail banking. He is passionate about investing, with a particular interest in Australian small-caps.

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