My 3 Biggest Learnings from 2024 and Investing Strategy for 2025
I hope you all had a great Christmas and a good start to 2025!
Over the last few days, I took time to reflect on my investing strategy - the things that went well and my mistakes.
I like a critical look at my investing strategy, so today, I want to focus on the points that I want to improve in 2025. I‘ll make another list next week with all the points that worked well and that I want to keep doing.
But for now, let‘s look at what’s there to improve:
1. Momentum Matters
In years like this, when the market only knows one direction, it's tempting to abandon your strategy and chase the hype surrounding top-performing industries and companies.
That‘s not my style.
I generally think this stubbornness is needed to have long-term success. However, I also realized that being too stubborn in your approach (or, put differently, not adjusting) can hurt your performance.
My stubbornness shows in my tendency to ignore momentum too much. I buy stocks that I consider mispriced and usually give them two to three years to play out.
Judging by history and the experience of many of the greatest investors out there, it takes two to three years for the market to realize its mistake. That sounds great. But this works better in theory than practice. Why?
Because markets are more efficient than we want to give them credit for. “If it’s too good to be true, it probably isn’t true.”
And whether you find a reason for the stock being cheap or not, it’s better to be on the safe side and make sure to have a reason for it to become fairly priced again - a catalyst. Catalysts create movement, which in turn creates momentum.
I underestimated momentum in past investments. And it was costly this year.
My Learning: Focus more on Catalysts and Inflection Point Businesses
2. The Right Moment to Sell
All of my stocks were higher at some point in 2024 than they were at the end. For some stocks, this means I can buy them cheaper and accumulate a larger position. For others, it might mean I missed the moment to sell.
It‘s a serious mistake if you knew better at the time but ignored it because you tricked yourself into thinking there’s more to come.
Of course, you could always say in retrospect that you knew better. However, since I write down the thesis for every investment case and what needs to happen for me to sell, I can check whether I actually knew better at the time.
Sometimes, I ignored my own “Sell when this happens…” category and saw the shares decline afterward instead of taking the profit.
My Learning: Act on your Thesis! Not every company turns into a compounder!
If your investment case worked out, stop trying to justify to keep holding the stock.
3. Your Investing Strategy Needs to Fit YOU
As you all know, I wanted to transition more into micro-caps this year. And I did do that with my research. However, it takes a lot more time to research microcaps and keep updated on them. Time, I unfortunately have not always had this year.
This resulted in fewer investments and, I’m sorry for that, fewer pitches and content for you.
Why does this point matter for my investing strategy? Because it made me realize that you need to be realistic and honest with yourself. I liked the idea of microcap investing so much I wanted to force the change.
In reality, a more balanced mix of micro-cap and mid- to large-cap stocks would’ve resulted in more opportunities and more content for you.
My Learning: Find what works for you and be realistic about limitations!
As I have mentioned to the Paid Subscribers already, starting in late February, I can spend much more time researching stocks. Together with the new Community, I believe this year’s lessons will be very helpful in 2025.
More information (for Free and Paid Subscribers) on “The Intrinsic Value Podcast” Community will be available tomorrow!
Schedule for the Next Posts:
Updates on the New Community (Tomorrow)
Portfolio Update and Recap (Next Week)
New Stock Pitch (The Following Week)
Best
Daniel