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The Doji Gazette, Mortensvinen 8, Oslo (2025)

29/01/2024

The 50/30/20 rule is a straightforward and effective budgeting framework that simplifies managing personal finances. It consists of dividing your after-tax income into three categories: Needs, Wants, and Savings/Debt.

50% - Needs: This is where you allocate half of your income. It covers essential living expenses such as rent or mortgage, utilities, groceries, transportation, and necessary insurance. By limiting your needs to 50%, it ensures that the most crucial expenses are always covered, preventing financial strain.

30% - Wants: This segment accounts for 30% of your income, intended for lifestyle choices and non-essential spending. This includes expenses like dining out, leisure activities, hobbies, and luxury items. The rule allows for personal enjoyment and quality of life, yet keeps discretionary spending in check to avoid financial pitfalls.

20% - Savings/Debt: The remaining 20% is set aside for savings, investments, and debt repayments beyond the minimum. This part is key to building financial security, enabling you to save for future goals like retirement, an emergency fund, or paying off debts faster.

By following the 50/30/20 rule, you can achieve a balanced approach to budgeting. It helps in maintaining financial health by ensuring that your essential needs are met, your lifestyle desires are fulfilled in moderation, and you are consistently working towards long-term financial stability and freedom. This rule is not only easy to follow but also adaptable, making it suitable for various income levels and financial goals.

28/01/2024

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Peter Lynch is renowned in the financial world as one of the most successful and influential fund managers. As the manager of Fidelity's Magellan Fund from 1977 to 1990, Lynch achieved an extraordinary annual average return of 29.2%, consistently outperforming the S&P 500 and making the Magellan Fund the best-performing mutual fund in the world during his tenure.

His investment strategy, characterized by a keen focus on company fundamentals and a preference for long-term holding, coupled with his ability to identify high-potential "ten baggers," helped grow the fund from $18 million in assets to a staggering $14 billion by the time he left.

Lynch's legacy extends beyond his impressive track record. He is also known for his ability to demystify stock market investing for the average investor, making complex concepts accessible through his books, most notably "One Up On Wall Street." His philosophy empowers individual investors, encouraging them to leverage their own knowledge and experiences in their investment decisions. Lynch's contributions have left a lasting impact on the world of finance and investment strategy.

27/01/2024

People often ask how much money are needed to start investing. If you have specific instruments, or want to construct your own portfolio, you might need a minimum of initial capital, but when it comes to investing for your retirement, it's not. Just buy a couple of broad ETFs and make sure to save as much as you can every month.

In this example, we see that $100 per month will grow to around 800k in 50 years with an 8% return. As you can see from the graph, the return increase exponentially towards the end. Which means, if you start early you can get away with small amounts. If you start late, you really need to set aside substantial amounts.

26/01/2024

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Peter Lynch is widely celebrated for his exceptional career as a fund manager, particularly for his tenure at Fidelity Investments where he managed the Magellan Fund from 1977 to 1990. Under his leadership, the fund's assets grew from $18 million to an astounding $14 billion, making it one of the best-performing mutual funds in the world. Lynch gained a reputation for his savvy stock-picking skills, often focusing on undervalued companies with strong potential for growth, a strategy that yielded an average annual return of nearly 30% during his management. His success not only cemented his status as a legendary figure in the investment world but also popularized the retail mutual fund as an investment vehicle for the average investor.

In his book from 1989 "One up on Wall Street" (a must read for investors) he can't seem to wrap his head around the valuations of Japanese stocks, and just a few months later, the market crashes horribly. 35 years later, it still hasn't recovered fully. Impressive display of battling FOMO.

23/01/2024

Michael Burry, a former physician turned hedge fund manager. He gained fame as one of the first to predict and profit from the subprime mortgage crisis of 2007-2010. Burry, who transitioned from medicine to founding his hedge fund, Scion Capital, was featured in Michael Lewis's book "The Big Short".

Knowing who Michael Burry is, it's no wonder over half of his portfolio is tied up in put options.

Couple of caveats:
The put options are priced based on notional value. Second, the 13-F filing is a snapshot for Q3.

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The information provided here is solely for educational purposes. It's important to conduct your own research and due diligence. Remember, you alone are accountable for any investment, tax, or financial decisions you undertake.

22/01/2024

"They mistook leverage for genius."

In the realms of TikTok, Instagram, and Wall Street Bets on Reddit, there's a growing trend of individuals achieving remarkable success through the extensive use of leverage. This concept is particularly appealing to investors with smaller portfolios. After all, who wouldn't be tempted by the prospect of turning a modest $10,000 into a staggering million in just a few months?

The problem with leverage is that when it turns bad, you are out of the gene pool. By rushing the investment process through leverage, you're essentially risking everything. The antidote to this high-stakes strategy is patience. Seek alternative pursuits for excitement.

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21/01/2024

Visa is one of my favorite stocks. With outrageous financials (50% profit margin is crazy), a dominant market position, few real competitors and a strong MOAT, this company checks almost every box for a value play. The "only" downside to Visa is the price. At the time of posting, they are up 23% YoY. They are trading at 27 P/E and dividend yield of 0.77% is not great.

But in the name of Warren Buffett; "it's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

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The information provided here is solely for educational purposes. It's important to conduct your own research and due diligence. Remember, you alone are accountable for any investment, tax, or financial decisions you undertake.

19/01/2024

Everyone loves dividends, but buybacks can be even more beneficial for the stock.

Let’s say a company will pay out funds equivalent to 5% of the market value and they can do this by paying out dividends or buy back shares.

A dividend yield of 5% is great. It means that in 20 years (assuming no growth or no changes to price) the stock has been paid fully in dividends. Dividend gives a shareholder a steady flow of cash, usually each quarter.

However, when a company pays out that dividend, you will be get taxed on it, and usually, the market expect the company to keep paying out dividends, ideally at an increasing rate. For some companies in more cyclical industries, they’re not necessarily able to pay dividend according to market expectations and must either reduce their dividend or borrow money to pay it out. That is just weird, right? Borrow money to pay stockholders a dividend? It happens.

In buybacks on the other hand, the expectations are usually not as tight. If a company announces a x million buyback programme, the market usually reacts positively to that news, but that programme usually lasts for some years and then they can choose to launch new products if they want.

What I really like about buybacks though, is that it reduces the amount of shares available, which means the earnings will be divided by less people in the future, and thus giving the shareholders a larger payout.

What’s your favorite, buybacks or dividends?

17/01/2024

The AI ecosystem involves more than just ChatGPT and Nvidia. Most investors are searching for the next pick and shovel play within AI. However, It doesn't appear to be in this roadmap. During 2023 cost of capital increased rapidly, yet all of these large companies made some incredible returns.

What will 2024 bring in AI?

We see more companies joining the AI field, including new AI-focused companies and established ones that are starting to fully embrace AI.

As demand grows, companies that provide essential AI tools and services are benefiting a lot. From computing to networking, it's a big challenge for all these companies, and it's hard for new companies to enter and make profits due to resource scarcity and large barriers of entry.

We might be in an AI bubble, but as with the dotcom bubble, there are good and bad investments. Maybe Nvidia is at its peak now, and maybe it still has room to grow. But what I would be careful with is to invest all my money into another ChatGPT plugin.

04/01/2024

Did you know that the US holds 42.5% of global market cap? Big US companies like Apple and Amazon help reach a huge $48.7 trillion market cap. China's at $5.9 trillion with names like Alibaba making waves. Japan, India, and the UK follow, with big businesses of their own driving growth. Together, these countries are the powerhouses of the stock world.

28/12/2023

In the realm of investment, diversification serves as a safeguard against stock-specific risks. Nobel laureate Harry Markowitz shed light on its merits in 1952, revealing that while diversification does reduce risk, it does so up to a point. Beyond that, additional stocks merely contribute to the baseline market risk without reducing volatility. The curve on this graph illustrates that after about 20 stocks, the benefits of diversification plateau. This is why a carefully selected portfolio of around 20 stocks can offer nearly the full benefits of diversification. It’s about striking a balance between too much and too little—holding enough to mitigate individual stock volatility, but not so many that you're simply mirroring market performance with excess baggage.

How many stocks do you have in your portfolio?

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