July - September 2014 articles archive home
What you might have learnt ...
... on the internet last week, from Eugene Fama, turkeys, Jim Rogers, jeff Miller, data at A Wealth of Common Sense and James Montier.
Tuesday, September 30, 2014 ... more
If you had twenty five years left to live, how much time would you spend worrying about the daily ups and downs of the stock market?
Monday, September 29, 2014 ... more
Which stories?
We are primed to use stories. Part of our survival as a species depended upon listening to the stories of our tribal elders as they shared parables and passed down their experience and the wisdom of those who went before.
Friday, September 26, 2014 ... more
What's your sign?
Want to know your chances of being rich? Ask yourself: What’s your sign? If you are a Virgo, Forbes did some research back in 2006 that should be good news for you.
Thursday, September 25, 2014 ... more
We don’t know now (nor do we ever know) what the overall market will do. As we’ve discussed in recent letters, there are reasons for investors to be frightened but also numerous individual opportunities worth seizing.
Wednesday, September 24, 2014 ... more
Kenny G & the daily struggle
According to Benjamin Graham Mr Market is a manic-depressive: emotional, euphoric, moody, one day high, the next low. But that hasn’t been obvious of late. A better description, at least of our market’s behaviour, would be lethargic, maybe even downright boring.
Tuesday, September 23, 2014 ... more
Position size
Start small. Many traders who trade a new strategy start by immediately risking too much. The most frequent reason given is that they don’t want to “miss out” on that big trade or long winning streak that could be just around the corner.
Tuesday, September 23, 2014 ... more
A big company is like a giant galley driven by a thousand rowers. Two things keep the speed of the galley down. One is that individual rowers don’t see any result from working harder.
Friday, September 19, 2014 ... more
Most models in economics and finance assume that risk preferences are a stable trait, much like your height. But this assumption, as our studies suggest, is misleading. Humans are designed with shifting risk preferences.
Thursday, September 18, 2014 ... more
A large number of investors unquestioningly embrace concentration as the right way to invest.
Wednesday, September 17, 2014 ... more
Poor Richard's Almanac
Peter Kaufman has compiled Poor Charlie's Almanac a collection of speeches and talks by Charlie Munger, the silent "I have nothing to add" partner to Warren Buffett at Berkshire Hathaway.
Tuesday, September 16, 2014 ... more
Benefits of technology
There are all kinds of wonderful new inventions that give you nothing as owners except the opportunity to spend a lot more money in a business that’s still going to be lousy.
Tuesday, September 16, 2014 ... more
That thing …
… that we all spend all our time not thinking about directly: that we are so tiny and at the mercy of large forces and that time is always passing and that every day we've lost one more day that will never come back.
Friday, September 12, 2014 ... more
A more bullish view
Deutsche Bank strategist David Bianco, a prominent Wall Street bear, ditched his pessimistic views on U.S. stocks this week and now sees ”a long lasting economic expansion of moderate growth, which should rival the U.S. record of 10 years.
Thursday, September 11, 2014 ... more
From Jeetay Investments
Optimism does not usually correlate with attractive valuations. Watch downsides when others can only think of upsides.
Wednesday, September 10, 2014 ... more
Things to do while waiting
If you feel you’ve no choice but to get into cash and wait for the next crash so that you can buy at the bottom again here are a few things you might want to do while whittling away the time.
Tuesday, September 9, 2014 ... more
Beyond P/Es
Always accessible, P/Es are the fast food of investing. Trouble is, as everyone knows, the ratio can be misleading.
Tuesday, September 9, 2014 ... more
Studies show that about nine out of ten people expect to feel more regret when they foolishly switch stocks than when they foolishly fail to switch stocks.
Friday, September 5, 2014 ... more
Corporations, lIke people
We find that a firm’s tendency, to engage in financial misconduct increases with the misconduct rates of neighbouring firms.
Thursday, September 4, 2014 ... more
A basic question
Investing is all about one basic question: Down the road — in five seconds, five months or five years — will someone else pay a different price for an asset than you will now?
Wednesday, September 3, 2014 ... more
7 essentials
Control your risk. There are many adventurous traders out there … they tend to be the ones that loose the most. Find a way to protect your capital while letting your profits run.
Tuesday, September 2, 2014 ... more
Economic growth is important if businesses are to grow and prosper, and there is a growing belief that the emerging markets of Asia, Latin America, and Africa are the future source of that growth.
Tuesday, September 2, 2014 ... more
Spending's OK too
If you bought David Bowie albums in the ‘70s, instead of squirreling away your money for a ‘rainy day’, you probably did the right thing.
Friday, August 29, 2014 ... more
From Fred Schwed Jr
Speculation is an effort, probably unsuccessful, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little.
Thursday, August 28, 2014 ... more
Selling too soon
They say you never grow broke taking profits. No, you don't. But neither do you grow rich taking a four point profit in a bull market.
Wednesday, August 27, 2014 ... more
It's all a fugazi
Somewhere in the world a 52-year-old puts his life savings into gold after spending 10 minutes reading something on Google about inflation written by a guy who learned about inflation by spending 10 minutes on Google.
Tuesday, August 26, 2014 ... more
10 commandments
Being lucky is the only 100% sure shot strategy. While making correct decisions obviously helps, it is harder than it seems. A relatively easier goal is to reduce errors.
Tuesday, August 26, 2014 ... more
Who you are
To put our faith in tangible goals would seem to be, at best, unwise. So we [should] not strive to be firemen, we [should] not strive to be bankers, nor policemen, nor doctors. We [should] strive to be ourselves.
Friday, August 22, 2014 ... more
Charlie on reading
First of all you have to understand your own nature. Each person has to play the game given his own marginal utility considerations and in a way that takes into account his own psychology.
Thursday, August 21, 2014 ... more
What’s in a name?
Adam Alter, author of Drunk Tank Pink and assistant professor of marketing at New York University’s Stern School of Business says there is a subtle feature that distinguishes the climbers from the fallers.
Wednesday, August 20, 2014 ... more
Poor protection
Martin Pelletier writing in The Financial Post says there are three often-used defensive strategies that have proven quite ineffective in the past but that, for some reason, continue to receive attention.
Tuesday, August 19, 2014 ... more
Education, inequality and a little optimism
By 2040 Africa is expected to have the biggest labour force in the world and experience faster economic growth than any other region.
Tuesday, August 19, 2014 ... more
Knowing the difference
An essential skill in alleviating our money worries is the ability to distinguish between wants and needs. The distinction is useful in warding off mere desires, like the longing for the latest shiny gadget with little utilitarian value.
Friday, August 15, 2014 ... more
Unfortunate realities ...
... of the investment business: 1) It can be difficult to find good advice. It can be helpful to work with an accredited professional but it doesn’t guarantee they will have your best interests at heart.
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Thursday, August 14, 2014 ... more
As long as stock prices rise they believe that they will get richer and richer just by owning pieces of someone else’s business.
Wednesday, August 13, 2014 ... more
From mirroring someone’s body language, to unwittingly mimicking someone’s accent, most of us have a subconscious desire to copy others. We are born copycats.
Tuesday, August 12, 2014 ... more
A case for African Bank?
Investment legends like Benjamin Graham, John Templeton and Warren Buffet realised many decades before behavioural finance became a respected academic discipline that systematic psychological errors tend to create market inefficiencies.
Tuesday, August 12, 2014 ... more
At our most stupid
We all have self-cures for strong feeling. Then the self-cure becomes a problem, in the obvious sense that the problem of the alcoholic is not alcohol but sobriety.
Friday, August 8, 2014 ... more
A surprising number of people retain from childhood the idea that there is a fixed amount of wealth in the world. There is, in any normal family, a fixed amount of money at any moment. But that’s not the same thing.
Thursday, August 7, 2014 ... more
Sometimes …
… the line between investing and gambling can be hard to see. All too often what starts out as research-driven investing can turn into a blind gamble.
Wednesday, August 6, 2014 ... more
What ...
Jonathan Golub, Chief U.S Market Strategist at RBC Capital Markets doesn’t think bull markets get tired, run out of steam, or stop going up because people stop feeling good about stocks and that only a recession will end this bull market.
Tuesday, August 5, 2014 ... more
The bottom line
Below is a set of 50 beliefs that, for this writer at least, define the “bottom line” when it comes to stock market investing.
Tuesday, August 5, 2014 ... more
Brave new world
Alongside Orwell's dark vision, there was another - slightly older, slightly less well known, equally chilling: Aldous Huxley’s Brave New World.
Friday, August 1, 2014 ... more
In his Book, You Are Now Less Dumb, David McRaney’s explains why our delusions improve our chances of success. Presumably that applies to our chances of beating the market.
Thursday, July 31, 2014 ... more
When facts contradict beliefs, the facts are minimized, dismissed, ignored, denied, manipulated or reinterpreted to "fit" our beliefs.
Wednesday, July 30, 2014 ... more
How to choose
As any blackjack dealer or tarot reader might tell you, we have a love for the flip of the card. Why shouldn’t we? Chance has some special properties. It is a swift, consistent, and relatively cheap decider.
Tuesday, July 29, 2014 ... more
Ray Bradbury on …
Why is it that in a society with a Puritan heritage we have such completely ambivalent feelings about Work? We feel guilty, do we not, if not busy? But we feel somewhat soiled, on the other hand, if we sweat overmuch?
Friday, July 25, 2014 ... more
Ego depletion
Ego depletion occurs when we're forced into too many acts of self-control in a short period of time. No matter how strong-willed you are you'll be more likely to make poor choices or succumb to temptation after sustained periods of self-denial or decision making.
Thursday, July 24, 2014 ... more
Where clocks have no hands
It is a well-worn cliché. The stock market is the capitalist casino, a place where gambling wears a thin mask called investing.
Wednesday, July 23, 2014 ... more
Reasons to sell
Tim Hanson, writing at Fool.com, says that whilst you should always be a reluctant seller, there is a time to sell, which is when you've lost faith.
Tuesday, July 22, 2014 ... more
No fewer than 15
What is required [to succeed in the market] is the ability to distinguish the relatively few companies with outstanding investment possibilities from the much greater number whose future will vary from the moderately successful to the complete failure.
Monday, July 21, 2014 ... more
Extract …
Forget about academia, you’ve done your work, start celebrating your success, start reaping your rewards, start living your lives to the full in the real nasty, sexy world out there.
Friday, July 18, 2014 ... more
A self-serving bias
We actively edit our own lives, and spend most of our lives doing things we’re at least average at and which provide a positive stream of feedback, which makes us feel good about ourselves.
Thursday, July 17, 2014 ... more
Illusory correlation
We are pattern-seeking primates. We have an inherent need to make sense or find an explanation for everything we experience, even though events may be random — a phenomenon called "illusory correlation."
Wednesday, July 16, 2014 ... more
A mispriced gamble
Value investing, at its core, possesses impenetrable logic; find a great business, figure out its true value, and pay significantly less than what it’s worth.
Tuesday, July 15, 2014 ... more
Charlie talks about ...
Lots of people are very, very smart in terms of passing tests and making rapid calculations, but they just make one asinine decision after another because they have terrible streaks of nuttiness.
Friday, July 11, 2014 ... more
I know …
… that the crowd is usually right. I know that no strategy works all the time. I know that book value and dividends are harder to manipulate than sales and earnings. I know not to listen to stock tips or market calls.
Thursday, July 10, 2014 ... more
Need to be right.
"In expert tennis, 80% of the points are won, while in amateur tennis, 80% are lost,” says Erik Falkenstein. “The same is true for wrestling, chess, and investing: Beginners should focus on avoiding mistakes, experts on making great moves.”
Wednesday, July 9, 2014 ... more
At Oaktree Capital
... It's frightening to think that you might not know something, but more frightening to think that, by and large, the world is run by people who have faith that they know exactly what's going on.
Tuesday, July 8, 2014 ... more
Don: "Up until the age of 25, I believed that 'invective' was a synonym for 'urine'." BBC: "Why ever would you have thought that?"
Friday, July 4, 2014 ... more
Media: Don't trust
Trust no one who is on [TV] more than twice a week. The majority of market news is not only useless, but harmful to your financial health. There is virtually no accountability in the financial pundit arena.
Thursday, July 3, 2014 ... more
We want to predict outcomes important to us. It is only rational to conclude that if one method does not predict well, something else may do better.
Wednesday, July 2, 2014 ... more
Stop losses
The stop loss if not used properly, will kill by a thousand cuts. It operates on fear — fear of decimation, which is a powerful and justified fear, but a fear just the same.
Tuesday, July 1, 2014 ... more
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