What are « asymmetric returns » ? – Philippe Le Blanc’s commentary

2021-10-20

When investing in a stock market, the maximum that can be lost is 100%, while the potential gain is theoretically infinite. This is called the asymmetry of stock returns.

From time to time, one of your stocks in the portfolio experiences stock market hiccups – this is currently the case with Alibaba’s stock in the COTE 100 Financial Bulletin portfolio. It is still too early to comment on the success or failure of our investment in Alibaba, but we must keep things in perspective: for each losing security, we will generally have a winning one and the value of this winning security could potentially be multiplied several times. Such a stock will compensate many times for the poor performance of a losing one.

The other facet of asymmetric returns is the very basis of the “value” investing philosophy. This consists of identifying securities whose price is significantly lower than the valuation an investor will conservatively make of them.

If you can successfully find and…

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