October - December 2012 articles archive home
 
We don't need to be 100% sure …
… that the worst fears of climate scientists are correct in order to act. All we need to think about are the consequences of being wrong.
Friday, December 28, 2012 ... more
 
 
The differences ...
… between making a trade (T.) and playing a hand of poker (P.):

T. A trader will rarely see profits snatched away from him suddenly; his pain is of a more gradually built-up nature.
P. A player will encounter many "bad beats" with their accompanying psychological pain.
Thursday, December 27, 2012 ... more
 
 
The value of a good degree
Consider the situation of a hiring decision maker at a large firm. She reads through a lot of resumés and interviews candidates. She develops hunches about who is and isn’t good. Our decision maker has real ability: the people she thinks are good are, on average, substantially better than the people she thinks are not so good. But ...
Friday, December 21, 2012 ... more
 
 
Amongst equals
These are the men whose sole business is stock speculation. When they have once entered the street, they never leave it except in a pine box or a rosewood case, according to circumstances. If they lose money, they stay there to regain it, and if they make money, they stay there to make more. Constitutionally, and by temperament, they are speculators.
Thursday, December 20, 2012 ... more
 
 
Why property
The rich either made their wealth, or kept their wealth, in real estate. The secret is to do your homework, and then dare to try. You will either win, or learn. And you never learn less.
Wednesday, December 19, 2012 ... more
 
 
Wrong theories & beliefs
Market models and theories of investment are often based on mathematical convenience rather than empirical evidence. A whole edifice of investment theory has been built on the assumption that market prices are normally distributed. The normal distribution is very handy for analysts because it allows for precise probability-based assumptions.
Tuesday, December 18, 2012 ... more
 
 
Death Star II nowhere, sadly
At first glance, we admit the petition to the White House to secure resources and funding, and begin construction of a Death Star by 2016 has got “no brainer” written all over it…
Friday, December 14, 2012 ... more
 
 
Can’t be done
Friedrich Hayek famously described the belief that an analyst can determine a “true” price that is more sound or efficient than that attained through the market process as a “fatal conceit.”
Thursday, December 13, 2012 ... more
 
 
Safe as a bank
In a world of investment projects whose costs and risks are perfectly transparent, most individuals would be frightened. Real enterprise is very risky. It’s easy to overpromise, but harder to make your promises believed.
Wednesday, December 12, 2012 ... more
 
 
Investing, like war
There is no clear-chartered course in the field of investments. Nevertheless there is a rational method of discipline and conduct to be followed that will serve
Tuesday, December 11, 2012 ... more
 
 
I have to say it …
… the service level we’re getting in shops these days is abysmal.
Friday, December 7, 2012 ... more
 
 
Unexpected benefits
What is so interesting about the Nedbank Green Index is that although it is compiled through a set of environmental rules, there seem to be strong financial outcomes. [If we go back to July 2008] to the end of October 2012, the index outperforms the All Share by more than 40% …
Thursday, December 6, 2012 ... more
 
 
Why …
… you can’t make money out of analysts. We take 10 oil engineers and we ask them to design a refinery. And it’s not an exaggeration but if you take their average design you’ll get a good refinery. And if you did a bridge … or any human activity, if you took a consensus you’d get a good whatever you were designing. But ...
Wednesday, December 5, 2012 ... more
 
 
A value investor’s advice
Some individual investors have shaken off the trammels of reason. Instead, they have opted to run wild after golden visions, turning to fads, alchemy, and the stars and moon in desperate efforts to increase their wealth.
Tuesday, December 4, 2012 ... more
 
 
A modern story
I sat next to a famous 97 year old singer yesterday … she had sung with Danny Kaye, Red Skelton, Frank Loesser, Lucille Ball, Frank Sinatra and many others in her illustrious career. At the age of 30 she married a gynaecologist and had 60 years of a beautiful happy marriage.
Friday, November 30, 2012 ... more
 
 
Cyclical.
There’s little that’s as dangerous for investor health as insistence on extrapolating today’s events into the future. Investors with no knowledge of (or concern for) profits, dividends, valuation or the conduct of business simply cannot possess the resolve needed to do the right thing at the right time.
Thursday, November 29, 2012 ... more
 
 
Why we still believe
Rational astrologies refer to conventional beliefs adherence to which confers important benefits. In order to gain the benefits, an individual must persuade himself that the favoured beliefs are in fact true, or else pretend to believe and know himself to be a cynical prevaricator.
Wednesday, November 28, 2012 ... more
 
 
Consequences of our biases
Despite the belief that we are logical decision makers our minds are inherently susceptible to many forms of bias – at least 22 according to James Montier’s book, Behavioural Investing: A Practitioner’s Guide to Applying Behavioural Finance.
Tuesday, November 27, 2012 ... more
 
 
Why
An important but sad reason why our requirement for wealth-as-insurance is insatiable is because insurance is often a zero-sum game. Consider a libertarian Titanic, whose insufficient number of lifeboat seats will be auctioned to the highest bidder in the event of a catastrophe.
Friday, November 23, 2012 ... more
 
 
Green monster
It is often said that stock markets are driven by greed and fear. But, as legendary investor Warren Buffett points out, "It is not greed that drives the world, but envy."
Thursday, November 22, 2012 ... more
 
 
Intuition
People are tripping over each other. Everybody’s got to rush in because they have to do what everyone else is doing … and everybody knows everything at once. It didn't used to be that way.
Wednesday, November 21, 2012 ... more
 
 
Not smart
How often do we hear statements like “Most of the ‘smart money’ is going into energy stocks right now”? Or “Watch what the ‘smart money’ is doing”. It implies that non-professional investors are not ‘smart’.
Tuesday, November 20, 2012 ... more
 
 
You look out the window …
… at your neighbour and you wonder how they can afford the cars they drive, that awesome remodelling project they’ve started and the vacation they’ll be taking next month. After all, they live next door, your kids go to the same school, and you know your salaries aren’t that different
Friday, November 16, 2012 ... more
 
 
By George
There seems to be three camps of market participants in current times. The first believe that everything is great, the economy has clearly restructured and the bears are just trying to justify having missed out. And will likely miss out again.

i want to cheat on my girlfriend why do guys cheat on their girlfriends will my girlfriend cheat
Thursday, November 15, 2012 ... more
 
 
Most coming events …
… cast their shadows before, and it is on this that intelligent speculation must be based. The movement of prices in anticipation of such an event is called discounting …
Wednesday, November 14, 2012 ... more
 
 
Soros
Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.
Tuesday, November 13, 2012 ... more
 
 
Visit to Heaven
I sat down to rest, and begun to tackle the queerest sort of strangers and ask for information, but I didn’t get any; they couldn’t understand my language, and I could not understand theirs. I got dreadfully lonesome. I was so down-hearted and homesick I wished a hundred times I never had died.
Friday, November 9, 2012 ... more
 
 
Nobody knows …
… the stock market. The unpredictable rise and fall of stock prices prove it.
Thursday, November 8, 2012 ... more
 
 
Who they’d be
Pacino would be Soros. He's got the full package; attacking from all angles and styles; pulling in other big guns where needed. But with an underlying dedication to craft. Occasionally he'll use sheer force of personality to get the trade or film over with.
Wednesday, November 7, 2012 ... more
 
 
Buy & hold what?
The concept that 'the market' always comes back is deceptive. The sales pitch for ‘buy and hold’ sounds infallible, but it isn’t. The market might always come back, but that doesn’t mean your portfolio will.
Tuesday, November 6, 2012 ... more
 
 
A view from Nedgroup Private Wealth Stockbrokers
Extracts of a conversation with Donald Rogan, Head of Nedgroup Private Wealth Stockbrokers.
Monday, November 5, 2012 ... more
 
 
There is a difficulty …
… which keeps even the best behaved governments from using resources well. This problem was explained by the economists Milton and Rose Friedman [who] argued that there are only four ways to spend money.
Friday, November 2, 2012 ... more
 
 
The professional trader …
… comes habitually to expect that nearly everyone else will be wrong, but is, as a rule, confident that his own analysis of the situation will prove correct … the greater the number of bullish opinions he hears, the more doubtful he becomes about the wisdom of following the bull side.
Thursday, November 1, 2012 ... more
 
 
Be scared
There is a random distribution between wins and losses for any given set of variables that define an edge. In other words, based on the past performance of your edge, you may know that out of the next 20 trades, 12 will be winners and 8 will be losers. what you don’t know ...
Wednesday, October 31, 2012 ... more
 
 
Nicolas Darvas …
… popularized a very simple trading method in his book, How I Made $200 000 000 in the Stock Market.
Tuesday, October 30, 2012 ... more
 
 
From Cannon Assets Managers.
Following Geoff Blount’s recent revelation that the market value of Mr Price almost exceeds that of the entire Construction sector, we went to ask Cannon Assets Managers’ CEO if he had any other findings that he’d be willing to share with us.
Monday, October 29, 2012 ... more
 
 
The ETFs of our discontent
ETFs are intended to be the loss leader. The missile sponge. We are supposed to give away capital for free so that people will trade sexier products with more edge ... The more I thought about it, the more depressed I became. I went into trading to become a rock-star, to make triple-digit returns, to become fantastically wealthy, and to be the envy of the financial community.
Friday, October 26, 2012 ... more
 
 
Lessons from 1987
On Oct. 19, 1987, the Dow plunged almost 23%, its largest one-day percentage-point drop ever. The lessons we can learn from it and current warnings:
Thursday, October 25, 2012 ... more
 
 
Then, as now
“At Cannon Asset Managers, we have always believed that the price you pay for an investment is the most important determinant of your investment return,” says Geoff Blount in a recent article,
Wednesday, October 24, 2012 ... more
 
 
Nothing to rely on
Financial people usually start off with the best intentions: they go to school, learn a bunch of stuff, then they apply it in the real world, and make good money for a while. Then the money is not good enough, so they apply more and more leverage ...
Tuesday, October 23, 2012 ... more
 
 
Nictus, PSV & Gold
PSV Holdings released results on Friday that probably won’t have traders clambering for stock but that should appeal to value investors, because, while the share trades at a significant discount to tangible net asset value, prospects have significantly improved.

Monday, October 22, 2012 ... more
 
 
How much correctness?
It’s now very common to hear people say “I’m rather offended by that.” As if that, somehow, gives them certain rights. It’s actually … simply a whine. Nothing more.
Friday, October 19, 2012 ... more
 
 
Lavish CEO pay doesn't work
Outsized CEO pay is a bone of contention for shareholders but is usually justified with the argument that if a company doesn’t pay top dollar, its top brass will go where they can earn more.
Thursday, October 18, 2012 ... more
 
 
The forgotten victims
“The 12-year-old child who texted me out of the blue simply wanted to pass along a few tips to other kids traumatized by the Wall Street downturn,” Michael Lewis explained in Bloomberg last week.
Wednesday, October 17, 2012 ... more
 
 
What …
… Dan Loeb Has Learned as an investor:

If spending all your time reading research reports and only looking at screen, you will fail. Be well-rounded, travel, study things outside of the narrow topics of finance. If investing was just about numbers, any accountant could do it.
Tuesday, October 16, 2012 ... more
 
 
Big picture
Although there was a strong atmosphere of negative sentiment at The Big Picture Conference in New York last Wednesday … James Bianco, president of Bianco Research LLC encapsulated the more upbeat feeling.
Monday, October 15, 2012 ... more
 
 
How intelligent?
Life as a non-genius, is the lot, by definition, of almost all of us. But within the normal range of functioning, we place a lot of importance on innate qualities like intelligence (whatever its definition) at the expense of other characteristics that are likely to make us effective students, workers and creators.
Friday, October 12, 2012 ... more
 
 
Famous last words
The frame of mind that leads to some of the biggest investment fumbles can be summed up by famous last words.

"I have to get in before I miss more upside." One of the fastest roads to poor results; Buy businesses, not regrets.
Thursday, October 11, 2012 ... more
 
 
You’ve been told
“… the complexity of the market is out there, but so is access to education. When I have a look at the retail investor I’d say that their level of sophistication has really grown to match it.
Wednesday, October 10, 2012 ... more
 
 
Lessons …
… that Bruce Berkowitz wishes he’d learnt long ago:

You have to have cash, especially when no one else has it. “Cash is like a financial valium, it allows you to keep your cool during very difficult times.”
There is no free lunch - either it’s not free, or it’s not lunch.
Tuesday, October 9, 2012 ... more
 
 
How Citi sees things, Rare does them and Alert failed
“Behind the framework is a strong belief that it is crucial to see things not in terms of ‘good’ or ‘bad’, nor in terms of ‘improving’ or ‘deteriorating’,” they say, “but rather in terms of ‘better’ or ‘worse’ than what is already priced into the market.”
Monday, October 8, 2012 ... more
 
 
Listen to the foxes
In 1953 the philosopher Isaiah Berlin famously divided thinkers into two categories: the hedgehog and the fox. Borrowing from a Greek poet who said, "The fox knows many things, but the hedgehog knows one big thing.”
Friday, October 5, 2012 ... more
 
 
Successful investing …
… effectively requires three elements. The first is highlighted by the legendary hedge fund manager Michael Steinhardt, who urged investors to have the courage to be different.
Thursday, October 4, 2012 ... more
 
 
In a strange land
There were many other clues that this wasn’t your typical investment confab, where everyone sits and listens to the speakers and only asks questions at the end.
Wednesday, October 3, 2012 ... more
 
 
Scholl’s Rules
In a 1994 lecture Walter Scholls came up with 16 golden rules for investing. Here is an adaptation of those rules:

1. Price is the most important factor in relation to value.
2. Remember that a share of stock represents a part of a business and is not just a piece of paper ...
Tuesday, October 2, 2012 ... more
 
 
Prospects: Extracts of conversations with …
... Pete da Silva, Jasco CEO

“I’m very excited about the future of Jasco … although prospects are different, depending on which segment you’re talking about. ICT, is a mature environment, but there are some very exciting things happening. Alan Knott- Craig moving to Cell C is exciting, because he’s making everybody nervous, and when operators get nervous they spend.
Monday, October 1, 2012 ... more
 
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