Adverse Selection Bias is when one person in a transaction has more information than the other.  It is a specific subset of selection bias and has recently been on my mind.  A couple weeks ago, in my investment research for HIT Capital I found a stock growing 25% a year and trading at a P/E of 5.  To translate that into English, I found a stock trading 4x cheaper and growing 8x faster than the average US company.  But in my next level of research, I learned the stock’s largest owner, who owns 41% of the stock, was selling [...]

A Two-Decade Reflection on Happiness and the Age Positivity Effect As I reflect on my own life journey, I realize that my pursuit of happiness is still evolving.  Initially, my goals were about me, as I focused on personal achievements like earning a degree, finding love, and competing professionally. Later my goals began to include others, like achieving financial independence for my family, and creating a business.  Now my  focus is just as much on me as on others, like supporting my wife’s mission to help our local school, growing the HIT family's wealth, and helping my kids learn. [...]

Imagine strolling through your favorite supermarket on a Sunday evening after finishing a game of soccer with your friends. You're worn out, hungry, and the air is filled with the tempting aroma of freshly cooked pastries. As you pass the second vendor he is frying up some crackling crispy pork, your mouth waters at the thought of biting into it. Your stomach is screaming "Yes!" and before you even have a chance to weigh the pros and cons, you find yourself buying some. This instinctive, visceral response is a prime example of the affect heuristic, a mental shortcut that [...]

It’s not often I get that lump in my stomach but yesterday it happened. Assertio Holdings, an investment of mine, had a stellar first half of the year. They were cheap, growing, and just closed a deal reducing their risk and adding a potential multi-billion dollar product to their repertoire. As I sat down to listen to their quarterly update, out of the corner of my eye, I saw a flash of red, Assertio's stock price plummeted. The market had just closed and their share price was down almost 40%. It must be a mistake I thought, so I looked [...]

At HIT Capital, our stock picking process begins with filling the top of the funnel with as many stocks as possible. In 2014, I started value investing with data on 2000 stocks, and now nine years later we are up to 42,280. As I look back and review the path we took to get here, two primary and intertwined hurdles jump out, overcoming the mere-exposure behavioral bias and learning how to code. In 2013, the subset of 2000 stocks I was using were the same ones utilized in most of the equity mutual funds and ETFs listed today. They [...]

When reviewing the stock market to gain insights into the future I prefer to use two tools or let's say lenses. The first lens is a magnifying glass of which I attempt to see what the market is doing today, tomorrow or next week. The second lens is a set of bifocals of which I use the magnifying portion to focus in on the market's value today, and then with that knowledge I look up through the distant lens to see the market further out. Magnifying Glass What is the market going to do today, tomorrow, or next week? This [...]