Those Who Forget the Mistakes of the Past are Doomed to Repeat Them (Part II)

Romano Sala Tenna

Katana Asset Management

It should be clear that speculative booms can last a number of years and the current fascination with ‘spec tech’ in Australia is probably less than 12 months old. So it is likely that we have time on our side. But the point about remembering the mistakes of the past is that when the music stops, it’s already too late: there are no chairs to sit on. One must sell speculative stocks into a rising market. We therefore restrict the overall number of technology stocks and force potential investments to compete for capital against existing holdings. And the statistics supporting this approach are compelling : if say 1 in 20 technology companies amount to anything (generous from my experience), then if you have 2 technology companies in the portfolio, the probability of them both being successful is 1 in 400, and the statistical likelihood of identifying 3 out of 3 is 1 in 8,000. If you are that skilful – in fact even if you are that lucky –then send us your resume and wait by the phone.

Romano  Sala Tenna
Portfolio Manager
Katana Asset Management

Katana Asset Management was founded in September 2003 as a boutique investment management firm. Katana employs an all opportunity investment mandate being style, sector and market cap agnostic.

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