MadCon

I am a contrarian value investor seeking to invest for the long term in wonderful companies with big moats and capable management, selling below intrinsic value

[MadCon @MadConX]

1/ I want to make a thread young people(under 35) on concentration vs diversifaction when investing in the stock market.

The way I invest will make you think deeper about this topic🤔

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[MadCon @MadConX]

@GaliciaInvestor Now what?

[MadCon @MadConX]

@TihoBrkan But… there are still good buys in this market. Should one just stay on the sidelines , or invest in current opportunities even though the whole market is expensive?

How an investor should behave?

[MadCon @MadConX]

@Gubben89 Acquisitions and BB

[MadCon @MadConX]

@babykswanson Bad capital allocation with BB too

[MadCon @MadConX]

@BourbonCap Wasting shareholders money

[MadCon @MadConX]

@stokel @standardnews Good joke

[MadCon @MadConX]

@teechongyen It was a trade for them at that moment

[Sidecar Investor @sidecarcap]

A century ago, the great investors didn't have spreadsheets, quarterly data feeds or Bloomberg terminals. Instead, they read the ticker tape.

Men like Jesse Livermore sat in crowded rooms, watching numbers print on a thin strip of paper. They weren't just watching the price; they were absorbing the volume, speed, and the rhythm of the trades. They were analyzing the tension between buyers and sellers. It was an art form driven by intuition, pattern recognition, and an understanding of human greed and fear.

Today, the ticker tape has migrated from paper strips to digital forums, podcasts, and social media feeds. Reading the tape means analyzing narrative, sentiment, and collective psychology. It means studying how people talk about a business and the labels it’s given, which helps reveal what is baked into the stock price.

When you look only at a spreadsheet, you miss the human element that actually drives the pricing of assets. You miss the qualitative clues that numbers disguise.

What are these clues?

Is the CEO praised in the press, on business podcasts or on Twitter?

Is there an unshakeable belief that the business model is unassailable?

Are investors extrapolating past stock performance into our uncertain future?

What words are commonly used to describe the company? Has it been labeled a "compounder" or “inevitable”.

When people, in mass, talk about a company this way, investors are exhibiting herding behavior. Everyone becomes a long-term investor. Dips are blindly bought. People start believing investing is easy.

These are not trivial observations. They are crucial clues about the expectations built into a stock price.

Valuation tells you what a company may be worth based on a specific set of assumptions. Reading the market tells you how fragile or robust those assumptions actually are in the minds of real people. It tells you how much room for error there is.

When the story around a stock is flawless, danger lurks.

When this happens, the hurdle for the company becomes impossibly high. Even stellar operational execution can lead to a dead or falling stock price because reality merely matches the sky-high expectations. Positive surprises are already baked in. And negative developments, which are by definition unpredictable, can lead to devastating drawdowns.

On the flip-side, the most lucrative opportunities present themselves when the psychological tape is completely blank or broken.

The company is executing well, growing its earnings, and allocating capital intelligently, but the stock is moving sideways. There is no cult-like following because the business model is too boring. The market hasn't priced in success because people aren’t paying attention.

By learning to decode the psychology of the investing public, you gain a vital signal that no financial model can ever replicate. You stop looking at what a company is worth on paper, and you start seeing the gap between expectations and reality.

[MadCon @MadConX]

@qualtrim I doubt you are right

[MadCon @MadConX]

@HatedMoats Now is time to buy Adobe, when people lose conviction @TihoBrkan

[MadCon @MadConX]

@TihoBrkan Why he doesn’t buy with his own money?

[MadCon @MadConX]

@stats_feed Welcome to third world countries

[MadCon @MadConX]

@TacticzH You have to have patience. It will rise

[MadCon @MadConX]

@BarrySchwartzBW @TheGarpInvestor Too much

[Tiho Brkan @TihoBrkan]

Great capital allocators (like Berkshire or Tencent, for example) carry a portfolio of long-term investments that sit on the balance sheet.

These non-operating assets suppress headline enterprise value, market cap, returns on capital, muddy the multiple ratios (another reason they are unreliable) and other financial metrics.

An intelligent investor needs to do some adjusting. A simple formula to think about:

Adjusted EV = Headline EV − (Portfolio Value x (1−Discount))

[Tiho Brkan @TihoBrkan]

We haven't had a bubble until now, according to my work.

One way to objectively confirm that is via this simple indicator in the chart below, which has NOT been in "extremely overpriced" territory since the year 2000/01.

So this is the first time the market has become extremely euphoric in 26 years.

[MadCon @MadConX]

@TihoBrkan But CEO and CFO leaving makes me pause for a bit

[MadCon @MadConX]

@TihoBrkan I am starting to believe adobe is right

[MadCon @MadConX]

@Invesquotes @StockMarketNerd CEO and CFO leaving boat sure amplifies the fishy smell

[MadCon @MadConX]

@Divergent7651 Read the last 2