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Other investment secrets
Having covered the basics when it comes to successful investing, this chapter will highlight some other pointers that you may find helpful when constructing and/or monitoring a portfolio, whether run by your manager or yourself. I start with what I consider to be the most important.
Sentiment versus fundamentals
If I had to sum up in one sentence the secret of successful investing, I would suggest ‘to know when sentiment and fundamentals part company, and then to have the courage to act’. When market sentiment runs too far ahead relative to the asset’s fundamentals – in other words, investors are pushing the price up beyond its worth – then the time has come to sell. Conversely, when sentiment trails fundamentals ...
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