The Art Of Execution – The Hunters: Pursuing Losing Shares

Rather than killing an underperforming investment and forgetting about it, the hunters stalked their prey – watching it get steadily weaker and lassoing another limb every time it stumbled.

Then they sat back with their prize and waited for it to recover, eventually selling it on for a handsome profit.

In gambling, such behavior – effectively doubling down – is known as the Martingale approach. It is frowned upon and rightly so: it often leads to ruin.

But in well-chosen investments, this is a strategy that wins over time – you acquire more and more assets at cheaper and cheaper prices. When the price of the assets goes up above the average price you have spent, even if it is hardly motoring into...