Arcam AB fka AMAVF

[Tom Joad]

Investor anxiety is often based on bad investment strategy. Keep investments diverse in number of companies as well as in type of company.

It's not a bad idea to think about the expected value for an investment strategy by using a largely subjective estimate of the probability of failing to break even, breaking even, and succeeding in making a profit for each company. Once one has worked through this equation for a few investment strategies you get some feel for the risks involved and it has a huge impact on your thinking and brings meaning to the word diversification. Try working out the expected value, for example, of winning a door prize when it costs a dollar to buy a ticket and you have a 1 in a thousand chance of winning $100. On average you expect to lose close to a dollar -

EV = (0.001) * (100 - 1) + (0.999)*(-1.00) = -0.90

There's no term for breaking even because that doesn't occur in door prize situations. Otherwise, the decimal factors, 0.001 and 0.999, are probabilities that add up to one. Those probabilities have to add up to one for each company estimate. The factor, (100 - 1), is the outcome of winning $100 after paying $1 for a ticket. The factor, (-1.00) is the outcome of paying for a ticket and losing.

expected value

A little boost here for diversification, John Templeton "is noted for, during the Depression of the 1930s, buying 100 shares of each NYSE listed company which was then selling for less than $1 a share ($17 today) (104 companies, in 1939), later making many times the money back when USA industry picked up as a result of World War II.[11]" It's said he bought and never looked back. Think of it this way, a "ten bagger" and nine bankrupt companies is a break-even proposition. Add due diligence and your odds on for a profit.

John Templeton

Anyway, I'm aware of the math firewall most have built around themselves, so the strong message is to diversify your investments! We don't know with certainty what the future holds so these investment problems are best described with probability and statistics. In a larger context, we all have incomplete knowledge and emotions and flawed reasoning so it's an approach to take when making decisions.

Yes, I'm more heavily invested in Arcam but I'm also quite diversified with about 25 different stocks. The only reason I have more in Arcam is that it's something I can grasp somewhat. I don't invest in financial stocks or aggressive growth companies like Tesla or technology companies when I don't understand the technology because the subjective probabilities I assign to winning, losing or breaking even are more likely way off the mark.