the bottom line: 2020 articles archive home
Giants & windmills
When confronting something which may be either a windmill or an evil giant, what question should you be asking? There are some who ask, "If we do nothing, and that is an evil giant, can we afford to be wrong?" These people consider themselves brave and vigilant. Some ask "If we attack it wrongly, can we afford to pay to replace a windmill?"
Tuesday, October 27, 2020 ... more
How changed?
Its always tempting at a time of upheaval to imagine that society will be changed forever, says Seth Klarman, CEO of the Baupost Group, in a letter to Limited Partners. In the depths of the 2008-2009 financial crisis, it was easy to imagine investor behaviour would change forever, because investors would have been permanently chastened, but Jeremy Grantham at the time predicted that any change would not be long-lived.
Tuesday, October 20, 2020 ... more
Alpha & beta
Alpha and beta are two key coefficients in the capital asset pricing model used in modern portfolio theory. An asset's exposure to unsystematic risk is measured by its beta (β). Indicating whether it's more or less volatile than the market. The excess return of an investment relative to the return of a benchmark index is the investment's alpha (α).
Tuesday, October 13, 2020 ... more
Lets stipulate that neither I nor anyone else has privileged access to the future, says Bill Miller in his Q2 letter to shareholders, so no one knows for sure what is going to happen to stocks in the coming weeks and months. Still, there are some things that might help us sort through the differing opinions and probabilities. First, stocks go up most of time because the economy grows most of the time, about 70% for both time series.
Tuesday, October 6, 2020 ... more
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