Seven Lessons from Doug Kass

By Barry Ritholtz - January 23rd, 2011, 12:30PM

This post originally appeared on RealMoney Silver on Jan. 21 at 7:41 a.m. EST.

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Doug put together a list of his lessons learned this week:

1. There are substantive risks to momentum-based investing.

2. Even in a bull market, mo-mo investors in the highfliers see increasing risks Examples: Coinstar (CSTR), F5 Networks (FFIV), U.S. Steel (X), Freeport-McMoRan Copper & Gold (FCX), Gold (GLD).

3. Price action in certain market-leading stocks suggests a lot of the company-specific news has been discounted.

4. The market’s unrelenting advance is not likely unlimited, as trees don’t grow to the sky. Beware as monetary stimulation wanes.

5. If investing/trading in highfliers, particularly in light of a relatively low VIX, buy cheap protection by purchasing out-of-the-money puts. (Shorts,can buy cheap protection with out-of-the-money calls).

6. Being more flexible and opportunistic by identifying group rotation, rather than buy-and-hold.

7. Always be prepared for surprises.

Source:
Kass: Seven Lessons Learned
Doug Kass
TheStreet.com 01/21/11 http://www.thestreet.com/story/10981468/1/kass-seven-lessons-learned.html

PERMALINK
Category: Trading.

Comments

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “Seven Lessons from Doug Kass”

Kralizec Says:
January 23rd, 2011 at 12:34 pm
There are substantive risks to momentum-based investing.

It’s true. The losses really CANSLIM your assets.
Kralizec Says:
January 23rd, 2011 at 12:37 pm
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

STFU.

:-)
Kralizec Says:
January 23rd, 2011 at 12:42 pm
6. Being more flexible and opportunistic by identifying group rotation, rather than buy-and-hold.

I could use some help learning a practical way to keep track of group rotation.

And now I’ve finished making my present burst of comments on this thread.
robert d Says:
January 23rd, 2011 at 10:38 pm
I, for one, would love to know Doug Kass’s hedge fund’s investment record
over the past few years. Isn’t anyone else curious about this?
hdoggy Says:
January 24th, 2011 at 4:08 am
I think this is the next big thing.

4. The market’s unrelenting advance is not likely unlimited, as trees don’t grow to the sky. Beware as monetary stimulation wanes.

If QE2 is priced in, then we’re only a few months out before QE Lite2. That is, we’re keeping our balance sheet stable and will reinvest just like the last time we said we would do that. We know what happened next.

It’s about time to telegraph QE3 because we’re beginning to see the market wonder what happens next.
AHodge Says:
January 24th, 2011 at 10:12 am
couple nuggets here but this also a big DUUH
i suppose its possible to be a buy and hold AND momentum investor
but how dumb could you be.
risks? please
nothing is more certain in this bus than a big rip will end

it works til it doesnt
filter rule it
trailing stop it