Managing Risk

the kelly criterion

How to Use the Kelly Criterion to Avoid Portfolio-Killing Mistakes

I have often expressed my opinion that in investing, buying is the most important transaction in a stock ownership lifecycle. You’ve done the research. The stock is undervalued, the margin of safety is wide, and the upside looks incredible and you know you are paying a great price. But how much should you allocate? Too […]

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risk tolerance

Why Risk Tolerance Is the Single Most Underrated Edge in Value Investing

The Edge You’re Ignoring Could Be Costing You Millions. For value investors, risk is not the volatility in the market or in the stock price, but in fact it is how you react to it. Most investors obsess over metrics like price-to-earnings ratios, discounted cash flow models, or EBITDA margins. And yet, the biggest edge

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