A guided journey revealing hidden values and buried treasures amidst the dangers facing DIY investors.
A metaphorical journey through the hot, shifting sands of the capital markets ‘desert’ to awaken readers to the urgency of the "Behavior Gap"—a chronic gap of under-performance relative to the markets experienced by investors worldwide.
This is a roadmap of portfolio management concepts and contrarian tactics that can turn misbehaviors, undue risks, and short-term gambles into longer-term strengths. Through 30 chapters and four tiers, the author progressively introduces more powerful tools & techniques used in the founding and successful management of the Oasis Growth Fund, a North American Hedge Fund.
No matter the complexities, the material is purposeful, transparent and allows flexibility for the reader to pursue the adventure as long as the rewards justify the sacrifices. With pragmatic advice, insights and tomes for the ages, The Investing Oasis is a compelling resource for new and experienced investors, alike.
Value your time at the Oasis to prepare for the adventures ahead.
Author(s): J. T. Mason
Publisher: Wiley
Year: 2022
Language: English
Pages: 380
City: Hoboken
Cover
Title Page
Copyright Page
Table of Contents
About the Author
List of Abbreviations
Introduction
Who Might Benefit?
For DIY Investors
The Most Competitive Arena on Earth
Investing Is Simple, but Not Easy
Choosing a Mission
A Helping Hand
Counter Uncertainty with Stability
Walking the Talk
Setting a Social Contract
CAVEATS
In Respect of Your Advisor
For Financial Planners, Advisors, and Family Offices
Foundation
Chapter 1 Eyes Wide Open
Hierarchy of Creating Value with Investing
Gaining the Upper Hand
Better Behavior Beats Brains
Consumer, Dabbler, Gambler, Capitalist, or Investor?
Retail Investing – Three Alternatives
i. Passive Portfolio Management: ETFs
“Be the Market, Not Beat the Market”
ii. Day Trading Stocks
iii. Active Portfolio Management
Chapter 2 Choosing the Right Path
The Behavior Gap
Capital Markets Behavior: What Works? What Doesn’t?
Institutional Investors
Retail Investors
Neutralizing the Environment
Neutralizing the Emotions
All in the Family
Choosing a Path
Setting Expectations
Chapter 3 Risk 101
Building Perspectives
Fear
Evolution in Risk Management
Risk Management Plan (RMP) Overview
RMP #1: Establishing Risk Perspectives
Professionals: Justified Trading
Retail Investors: Behavior-Driven Trading
Rational Conclusion
Winning with Market Corrections
Accountability Creates Value
Chapter 4 Setting the Asset Mix
Reviewing Personal Risk
RMP #2: Determining Financial Capacity
RMP #3: Assessing Risk Tolerance
University of Missouri Risk Tolerance Test 1
RMP #4: Calculating a Required Rate of Return
RMP #5: Setting the Asset Mix
Asset Mix Refresher
Understanding the Reward/Risk Spectrum
Rewards per Unit of Volatility
Putting It All Together
The Asset Mix Decision
Asset Mix Hindsight
Investing 100% in Fixed Income
100% Invested in the S&P 500 Index
The Asset Mix Difference
Chapter 5 Firming Our “Backbone”
Keeping It Simple
Introducing the “Three Brains”
Who’s in Charge?
The Head: A Tale of Two Halves
Where O Where Art Thou Alpha?
Alpha Requires Unique Thinking
The Heavy Lifting Is Already Done
Heart Principles
Learn It the First Time
Guts: The Ultimate Decision-Maker
Harnessing the “Three Brains”
Building Backbone
Chapter 6 The Case for a Planner/Advisor
A Professional Backstop
Critical Moments
Planner vs. Advisor
Traits of a Quality Professional
Checklist for Hiring a Financial Professional
Performing an Annual Assessment
The Overall Value Proposition
Changing a Planner or Advisor
Going DIY
DIY Pros
DIY Cons
Best of Three Worlds: The Hybrid Model
Foundation Comments
The Investing Oasis: Tier 1
Chapter 7 The Oasis Growth Fund (OGF) Model
Choose Your “Camels” Well
RMP #6: Filtering for Quality Stocks
Winning Should Never Be by Chance
At the Core
Eight Steps to Designing a Core Growth Portfolio
Step 1. Designing a Purposeful Portfolio: Setting the Investment Policy
Chapter 8 Stock Selection: Quantitative Filters
Step 2. Designing a Purposeful Portfolio: Six Quantitative Filters
Step 3. Designing a Purposeful Portfolio: Deploying a Stock Screening Platform
Shhh . . . Shortcuts
Chapter 9 Stock Selection: Brains and the Brawn
RMP #7: Profiling for Stock Performance and Volatility Traits
Step 4. Designing a Purposeful Portfolio: Profiling a Stock’s Character
Managing a Portfolio’s Performance Character
Step 5. Designing a Purposeful Portfolio: Choosing a Stock Research Platform
Chapter 10 Stock Selection: Qualitative Filters
Step 6. Designing a Purposeful Portfolio: Four Qualitative Screens
Quality Leadership Traits
Business Model Diversity
Investing with Purpose
Environmental, Social, and Governance (ESG) Standards
Imperfect but Improving Standards
ESG Research Platforms
ESG Investing Choices
ESG Performance
Example: ESG vs. SRI
Chapter 11 Stock Selection
RMP #8: 3+ Degrees of Diversification
Benefits of a Well-Diversified Portfolio
Step 7. Designing a Purposeful Portfolio: Diversification Techniques
Investment Tip
Investment Tip
Risk Mitigation Benefits of Diversification
Correlation Coefficients Scale
Correlation Coefficient Example
Stock Comparison Analysis
Creating a Correlation Matrix
Stock Comparison Metrics
Summary of Diversification Techniques
Prioritization of Diversification
Chapter 12 Portfolio Construction Equal-Weighting a Portfolio
Step 8. Designing a Purposeful Portfolio: Equal Allocation
Advantages of an Equal-Weighted Portfolio
Final Steps
The Starting Line
Chapter 13 Beware Those Temptations
Wandering Spirits Beware
RMP #9: Speculation and Leverage
The Discretionary
The Good
The Bad
The Ugly
Tier 1 Summary
The Investing Oasis: Tier 2
Chapter 14 The Buy-in
Trading Challenges
Importance of the ACB
Lump Sum
Dollar-Cost Averaging (DCA)
DCA Protocols
Selling Put Contracts – A Wiser Buy-in (for More Advanced Investors)
Sentiment Indicators
Buy-in Checklist
10 Smarter Trading Tips
Chapter 15 Contrarian Rebalancing
RMP #10: Rebalancing
Less Is More
Buy Low / Sell High
Acting Contrarian
Which Stocks to Trim or Buy?
At What Threshold?
Relative Strength Indicators (RSIs)
A Built-in Relative Strength Indicator (RSI)
Leaders
Laggards
Benefits of Rebalancing
Mindful Portfolio Design Equals Time Management
Chapter 16 A Hidden Well of Income
RMP #11: Income and Protection with Covered Calls
Sell High, Buy Low
Odds Are in the Seller’s Favor
Covered Calls
Winning by Winning
The Importance of Deltas
Covered Call Example: MSFT
Covered Call Benefits
Non-critical Risk
Covered Call Tactics
Tier 2 Summary
The Investing Oasis: Tier 3
Chapter 17 Warren B – The Ultimate Contrarian
Becoming a Contrarian
Rejecting the Behavior Gap
Back to Market Timing
Technology: A Double-Edged Sword
Principles and Behaviors of the “Wise One”
Success Follows Character
Become a Contrarian
Chapter 18 Contrarian Cash and Leverage
RMP #12: Four Steps to Effective Cash Management
Seven Steps to Effective Debt Management
1. When to Deploy Leverage?
2. How to Deploy Leverage?
3. What Assets to Leverage?
4. How Much Leverage?
5. When and How to Unwind Leverage?
6. Access to Low-Cost Debt Facilities (Interest-Bearing)
7. Debt Facilities without Direct Interest Costs
Summary
Chapter 19 Digging for Buried Treasures
Sell High, Buy Low
Seller Sets the Terms
Three Possible Outcomes
Let the Hunt Begin
There are up to four steps to opportunistically selling put contracts:
Step #1: Finding Candidate Stocks
Scenarios for a Share Price Discount
Material Risks
Non-material Risks
Steps #2 and #3: Strike Price and Duration Selections
Three PUT Selling Examples (OTM, ATM, ITM)
Effective Management of a Portfolio of Puts
X Marks the Spot
Chapter 20 Emotion-free Selling
Selling Protocols
Personal Reasons
Portfolio Reasons
Security-Specific Reasons
The Essence of Capitulation
The Benefits of Capitulation
Testing Your Resolve
Emotion-Free Selling
Proactive Protection
Eliminating a Position – ITM Calls
Holding Faith
Abandoning a Stock
Tier 3 Summary
The Investing Oasis: Tier 4
Chapter 21 “Storm” Forecasting
RMP #13: “Weather” Forecasting
Predictions Are the Uglier Side of Forecasting
Market Sentiment Indicators
The Ultimate Wisdom of the Stock Market
Chapter 22 “Rounding Up the Camels”
RMP #14: Prepping for the “Storm”
Revisiting the Asset Mix
Keys to Moderating Portfolio Volatility
Risk Framing
Mental Preparation
“Rounding Up the Camels”
Getting Reinvested
When to Buy?
Which Stocks to Buy?
How to Buy during the Market Panic?
Storm: Post-Mortem
Chapter 23 Portfolio Protection
Portfolio Insurance 101
RMP #15: Profiting from the Panic
Reasons Not to Hedge
The Merits of Insurance
Insurance Decisions
How Much Insurance Is Enough?
Hedging Cost Reductions
When Best to Deploy a Hedge?
Being a Contrarian
Four Hedging Solutions
1. Shorting the Market
2. Buying Short-Term Volatility
3. Bear Put Spread (BPS)
4. VIX Call Spread Collar (Fence)
Profiting from Panic
A Risk Management Plan
Tier 4 Summary
Chapter 24 Putting It All Together
“All In”
Value-Creating Processes
Better Capital Markets Behavior
Risk Management
Capital Markets Expectations
Chapter 25 The Next-Gen Financial System
The Metaverse
Blockchain Technology
DeFi Technology
Modernizing Markets
Digital Coins/Cryptocurrencies
Bitcoin
Stablecoins and CBDCs
BitGold
NFTs
Distributive Autonomous Organizations (DAOs)
Borderless, Frictionless, Timeless, and Fairer
2030
Chapter 26 A Case for Active Management
The OASIS Growth Fund
The Oasis Vision
Investment Objective
Value-Creating Processes
Important Information for Investors
Chapter 27 Tools and Resources
Investing Education
Resource Triangulation
Research Categories
Three Thoughts about Second Opinions
Discount Trading Platforms
Reviews of Multiple Discount Trading Platforms
Well of the Wise: References, Studies, Books, and Authors
Portfolio Time Management
About the Website
Index
EULA
