April - June 2012 articles archive home
Crumbs on the shirt
A few years ago … a pair of researchers in the psychology department at Berkley staged an experiment. They grabbed students, as lab rats, broke them into teams, segregated by sex - three men, or three women, per team. Then they arbitrarily assigned one of the three to act as leader.
Friday, June 29, 2012 ... more
Inactivity …
… strikes us as intelligent behaviour. Neither we nor most business managers would dream of feverishly trading highly-profitable subsidiaries because a small move in the Federal Reserve's discount rate was predicted or because some Wall Street pundit had reversed his views on the market.
Thursday, June 28, 2012 ... more
Need to plan
It is my belief that many quants, hedge fund managers, and investment bankers came to believe—consciously or not—that, by explicitly embracing and accounting for chance, they had tamed it.
Wednesday, June 27, 2012 ... more
Know thyself …
… and know thy foibles. Study the history of your emotions and your actions. Because at the extreme moments of fear and greed, the power of the daily price momentum and the mood and passions of 'the crowd' are tremendously important psychological influences on you.
Tuesday, June 26, 2012 ... more
Not only Lazarus
Three companies that were in serious trouble a couple of years ago released their 2012 annual results last week. Two of them, Blue Financial Services and Wescoal, are back in the black. The third, WG Wearne, isn’t out of the woods just yet.
Monday, June 25, 2012 ... more
Faulty appeal
Fallacious Appeal to Authority - the endorsement of a position or statement simply based on the social stature of the person making it. Example: “My uncle says the earth is flat. He has a PhD in geophysics”.

Friday, June 22, 2012 ... more
Art and science
It’s hard to refute the argument that equity investing is at least as much an art as a science. To succeed, an investor needs the ability to carry out analytical analysis and a good ‘feel’ for market.
Thursday, June 21, 2012 ... more
Nothing to do
Remember the American stock market crash of 1907? Probably not. Everyone talks about the Crash of 1929, but no one talks about the crashes of 1907, or 1873, or 1857 … and others.
Wednesday, June 20, 2012 ... more
Staying put.
And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!
Tuesday, June 19, 2012 ... more
What to do with rights
Cash-strapped companies often turn to rights issues to raise money. In doing so, they usually grant their shareholders the chance to buy new shares at a significant discount to the ruling price. Why significant? Usually, to make the offer sufficiently attractive to ensure that it is fully subscribed.
Monday, June 18, 2012 ... more
I want you to learn …
… right at the outset not to play with the spoon before you take the medicine. Putting off an easy thing makes it hard, and putting off a hard one makes it impossible.
Friday, June 15, 2012 ... more
Warren on gold
[A] major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever unproductive – will pay more for them in the future.

Thursday, June 14, 2012 ... more
The most important thing
Some species of birds like to nest in tall evergreens and eat seeds, while others nest on cliffs and fish for a living. Some migrate and some stay put. Some fly, some walk and some swim.
Wednesday, June 13, 2012 ... more
6 keys
Why buy this particular stock, in this sector, now? You should have a specific reason to buy something, one that you can articulate in a sentence or two. Look at price; assuming your hypothesis is right – how high can it go? Consider upcoming catalysts.

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Tuesday, June 12, 2012 ... more
In turbulent times
I think uncertain times are the best environment in which to benefit from a disciplined approach to investing. When I talk about disciplined investing, effective investing, intelligent investing, for me it is all about buying good companies … at the right price.
Monday, June 11, 2012 ... more
Two worlds
We live simultaneously in two different worlds – one where social norms prevail, and the other where market norms make the rules. The social norms include the friendly requests that people make to one another. Could you help me move this couch? Social norms are wrapped up in our social nature and our need for community.
Friday, June 8, 2012 ... more
An important fact …
… about investing is that there are no indisputable laws, nor is there one correct way to go about it. What’s more, within the vast array of investment styles and strategies, opposing approaches can succeed at the same time.
Thursday, June 7, 2012 ... more
General conditions
Jesse Livermore came to the conclusion that it is the general market conditions that speculators must diligently strive to understand first, not individual stocks. “From then on I began to think of basic conditions instead of individual stocks,” he says in Lefevre’s Reminiscences of a Stock Operator.
Wednesday, June 6, 2012 ... more
Pit Bull lessons …
… from Martin Schwartz.

Whenever a stock has had a large three-day move in one direction, you do not want to be buying on the third day or selling on the third day of a down move. That's a sucker play.
Tuesday, June 5, 2012 ... more
Looking for good news
There was no shortage of small-caps reporting their results last week with eighteen companies releasing annual results and four their interim results. It wasn’t all good news; only ten of the twenty-two reported earnings. But, it wasn’t all bad news either ...
Monday, June 4, 2012 ... more
But there are rules
The mediocrity principle simply states that you aren't special. The universe does not revolve around you, this planet isn't privileged in any unique way, your existence isn't the product of directed, intentional fate, and that tuna sandwich you had for lunch was not plotting to give you indigestion.
Friday, June 1, 2012 ... more
The ego-driven …
… investor sees investing as something exciting. He mostly does it as a way to garner the admiration of others. He is constantly talking about this or that great deal, hoping others will be in awe of his prowess and immense wisdom. In reality, he doesn’t really make much money, a fact that he hides by any means possible.

Thursday, May 31, 2012 ... more
How market reacts
All news is first filtered through the prevailing market sentiment of the moment, and people specifically and the Street in general are often short-sighted and slow to change in the face of new news that threatens a specific fashionable worldview.
Wednesday, May 30, 2012 ... more
Wisdom of Barton Biggs
Quantitatively based solutions and asset allocation equations invariably fail as they are designed to capture what would have worked in the previous cycle … we have to be aware of our innate and very human tendency to fight the last war.

Tuesday, May 29, 2012 ... more
Weak balance sheets
One of the lynchpins to Anthony Bolton’s investment success was careful balance-sheet analysis. ““The job of a professional investor is as much about avoiding disasters as it is about picking winners,” says Fidelity’s ex-fund manager, “and the stocks that have been my biggest disasters over the years nearly always had weak balance sheets.”

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Monday, May 28, 2012 ... more
What a wonderful thing …
… is this Man! How surprising are his attributes! Poor soul, here for so little, cast among so many hardships, savagely surrounded, savagely descended, irremediably condemned to prey upon his fellow-lives,—who should have blamed him, had he been of a piece with his destiny and a being merely barbarous?
Friday, May 25, 2012 ... more
You can know about all the biases in the world, and, unless you are able to take them into account when making a decision, it’ll be useless knowledge. That’s the crucial ingredient, what psychologists refer to as meta-cognition – thinking about thinking.
Thursday, May 24, 2012 ... more
The ‘hunch’ of a man who has watched the stock market for half a lifetime may not be without value. In such a case it doubtless represents an accumulation of small indications, each so trifling or so evasive that the trader cannot clearly marshal and review them even in his own mind.
Wednesday, May 23, 2012 ... more
Sitting in Cash Tuesday, May 22, 2012
The market's response to updates Monday, May 21, 2012
Learning from experiments Friday, May 18, 2012
What anomaly? Thursday, May 17, 2012
Never wrong Wednesday, May 16, 2012
Earnings Tuesday, May 15, 2012
Buy out-of-favour Monday, May 14, 2012
Open to doubt Friday, May 11, 2012
Gold, like the dollar Thursday, May 10, 2012
Unpredictably random Wednesday, May 9, 2012
Essential qualities Tuesday, May 8, 2012
A new listing and a recovery play. Monday, May 7, 2012
Indifference Friday, May 4, 2012
Charlie on intelligence Thursday, May 3, 2012
What matters most Wednesday, May 2, 2012
Last week's results Monday, April 30, 2012
Need to disbelief Thursday, April 26, 2012
Where charts fail Wednesday, April 25, 2012
A common error Tuesday, April 24, 2012
Why worry about value when there’s growth? Monday, April 23, 2012
The best medicine Friday, April 20, 2012
Risk literacy Thursday, April 19, 2012
Thoughts on investing Wednesday, April 18, 2012
A sound background Tuesday, April 17, 2012
Opportunities Monday, April 16, 2012
Collective intelligence Friday, April 13, 2012
It may sound strange … Thursday, April 12, 2012
For all the intricacies … Wednesday, April 11, 2012
On value investing Tuesday, April 10, 2012
A web of causes Thursday, April 5, 2012
Price and Time Wednesday, April 4, 2012
Don’t trade poor odds Tuesday, April 3, 2012
Bad news Monday, April 2, 2012
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