In his recent interview with Morningstar, Gautam Baid discussed the importance of an investor’s slugging percentage. Here’s an excerpt from the interview:
The average success rate of even the best investors in the world is less than 50%. What matters is that when you win, you make it count. Anyone can identify a winning stock. Great investors differentiate themselves through superior individual position sizing. A truly great idea should make a big difference to your life and your portfolio.
Successful investing is not just being right per se. Far from it. It boils down to how great ideas are executed. The art of execution lies in the initial allocation and the subsequent pyramiding or averaging up.
It is important to make the great ideas count. It is not the frequency of winning that matters in investing. It is not about the batting average in investing, but the slugging percentage.
This is what George Soros referred to when he said it is not whether you are right or wrong. What matters is how much money you make when you are right, and how much you lose when you are wrong. Investors need to inculcate this expected value principle in our thinking.
You can read the entire interview here:
For all the latest news and podcasts, join our free newsletter here.
Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple: