October - December 2019 articles archive home
No one's complaining
“No one’s complaining” so it’s fine. “No one” really means “no one has complained to you“. It doesn’t mean no one is complaining to someone else, somewhere else. In fact, if the thing you make/sell isn’t meeting someone’s expectations
Monday, December 30, 2019 ... more
The smell of that buttered toast simply spoke to Toad, and with no uncertain voice; talked of warm kitchens, of breakfasts on bright frosty mornings, of cosy parlour firesides on winter evenings, when one's ramble was over and slippered feet were propped on the fender; of the purring of contented cats, and the twitter of sleepy canaries... Home! That was what they meant.
Friday, December 27, 2019 ... more
Since the release of Clement Clark Moore’s poem, A Visit from St. Nicholasin 1823, reindeer have been known as Santa’s sleigh pullers. It’s not without good reason that reindeer were chosen for this most important of roles. From their habitat
Tuesday, December 24, 2019 ... more
In the old days, it was not called the Holiday Season; the Christians called it 'Christmas' and went to church; the Jews called it 'Hanukkah' and went to synagogue; the atheists went to parties and drank. People passing each other on the street
Friday, December 20, 2019 ... more
BH Criteria
What are Berkshire Hathaway’s acquisition criteria? Here they are: 1. Large purchases (at least $50 million of before-tax earnings), 2. Demonstrated consistent earning power (future projections are of no interest to us, nor are "turnarounds")
Thursday, December 19, 2019 ... more
Research based
The power of markets is still not broadly accepted. People continue to make rash decisions in times of volatility instead of waiting things out. Over the long haul, markets have behaved the way we hoped they would. In the nearly 100 years of data
Wednesday, December 18, 2019 ... more
Like gifts
When it comes to gift-giving, some of the very worst advice gets bandied about at this time of year. Take, for example, the recommendation to give children books for Christmas on the assertion that they’re not fattening and are good for them? As Kin Hubbard says, nothing’s as mean as giving a little child something useful for Christmas. Except, perhaps, giving investors nothing useful by way of investment advice.
Tuesday, December 17, 2019 ... more
Not believe!
“Not believe in Santa Claus! You might as well not believe in fairies!” Some facts about Santa: Santa is the world's richest man. He may not be in the gift giving business for the big bucks, but Santa still needs money to keep his operation rolling
Tuesday, December 17, 2019 ... more
At all costs try to avoid granting yourself the status of the victim. Of all the parts of your body, be most vigilant over your index finger, for it is blame-thirsty. A pointed finger is a victim’s logo — the opposite of the V-sign and a synonym for surrender
Friday, December 13, 2019 ... more
If Warren Buffett had never learned anything new after graduating from Columbia Business School, Berkshire Hathaway would be a pale shadow of its present self. Warren would have gotten rich – what he learned from Ben
Thursday, December 12, 2019 ... more
3rd level abstraction
I think the market is a 3rd level derivative abstraction from reality – trading is like sailing the endless squalls cross winds and currents moving on the illusory surface. At any point in time a superstorm can come and wreck all ships plying
Wednesday, December 11, 2019 ... more
In his book, Stock Market Wizards, Jack Schwager notes that a common attribute of successful investors is their high level of self-confidence. “The more interviews I do with Market Wizard types,” said Schwager, “the more convinced
Tuesday, December 10, 2019 ... more
It's hopelessly optimistic to believe that an investor who is shell shocked following a big loss can somehow return to investing with the confidence necessary to consistently apply even the most proven investing system. If in your heart of hearts you believe
Tuesday, December 10, 2019 ... more
To put our faith in tangible goals would seem to be, at best, unwise. So we do not strive to be firemen, we do not strive to be bankers, nor policemen, nor doctors. We strive to be ourselves. But don’t misunderstand me. I don’t mean that we can’t be firemen
Friday, December 6, 2019 ... more
Amateurs vs professionals
The difference between amateur and professional investors: Amateurs have a goal. Professionals have a process. Amateurs think they are good at everything. Professionals know their circles of competence. Amateurs take feedback
Thursday, December 5, 2019 ... more
While not always easy, humility may be one of the most useful traits you can develop as an investor during a bull market, to remind yourself that the good times won’t last forever and you’re not as intelligent as rising markets may make you feel.
Tuesday, December 3, 2019 ... more
Emotions are a common obstacle to investment success. Even the most rational individuals are vulnerable to making poor investment decisions based on an overly emotional reaction to new information. Hence the reason it may be useful to have
Tuesday, December 3, 2019 ... more
5 signs
Five signs you’re about to make a bad investment decision:You are being influenced by someone who isn't a professional. People don't always get into trouble on their own. They often have help from a spouse egging them on or a friend or co-worker
Tuesday, December 3, 2019 ... more
Hypocognition is a term introduced to modern behavioural science by anthropologist Robert Levy, meaning the lack of a linguistic or cognitive representation for an object, category, or idea. We are hypocognitive when we are at a loss for words to describe how we feel.
Friday, November 29, 2019 ... more
Opposing views
“I don’t pay attention to negative market commentary,’ says Michael Batnick. “I avoid it not because I want to stick my head in the sand and ignore potential warnings, it’s just that this type of content doesn’t make you a better investor
Thursday, November 28, 2019 ... more
Q 4
History shows us stock markets tend to follow Sir Issac Newton’s theory that an object in motion stays in motion in the same direction. The S&P 500 was up nearly 21% through the first nine months of this year. These types of gains are actually
Wednesday, November 27, 2019 ... more
Best avoided - really?
Thing is, there are some big success stories coming from famous investors when it comes to penny stocks. In 1856, with a loan from a local bank Andrew Carnegie invested $217.50 in the Woodruff Sleeping Car Company. Woodruff's went on to
Tuesday, November 26, 2019 ... more
Confirmation bias is the propensity to seek out or interpret information that validates our beliefs. An investor who likes the idea of buying into small caps, for example, is more likely to look for information that justifies doing so and reject information to the contrary. Inversion can be particularly useful as a way to counteract the gravitational pull of confirmation bias.
Tuesday, November 26, 2019 ... more
Wrong theory
I think that whatever personal rule of life you may choose, it should not, except in rare heroic cases, be incompatible with happiness. There are a great many people who have the material conditions of happiness and who, nevertheless, are
Friday, November 22, 2019 ... more
Institutional investors
Seth Klarman on Institutional Investors: It is worth noting that few institutional money managers invest their own money along with their clients’. The failure to do so frees these managers to single-mindedly pursue their firms’, rather than
Thursday, November 21, 2019 ... more
Simple is best
A key rule in investing is that you don’t necessarily need to understand a lot of different things at any given time, but you need to understand the one thing that really matters. Simplicity or singleness of approach is greatly underestimated
Wednesday, November 20, 2019 ... more
Nietzsche on investing
Markets, like life, are messy. ,” As trading psychologist Brett Steenbarger says, “Trading distils the basic human challenge: the need to judge, plan, and seek values under conditions of risk and uncertainty. In mastering trading, we necessarily
Tuesday, November 19, 2019 ... more
Life lessons
Ten life lessons that Brett Steenbarger, trading psychologist and author, says he’s learnt from trading the markets: Have a firm stop-loss point for all activities: jobs, relationships, and personal involvements. Successful people are successful because
Tuesday, November 19, 2019 ... more
In the beginning … men and women lived all their lives thinking only of death. They enjoyed nothing, neither food nor drink, for they thought only of the Angel of Death and the day when they would die. Why was this so? They had nothing else
Friday, November 15, 2019 ... more
From Gene Fama
Things we learned from Gene Fama’s interview with Barry Ritholtz: Markets have always been efficient. “Technology should make it better. But the truth is, prices are so volatile that markets have always looked really efficient.
Thursday, November 14, 2019 ... more
4 skills
William Bernstein believes four skills are absolutely essential for investment success. First, you must be comfortable enough with numbers to understand their implications. Mathematics is the language of investing. The next survival tool
Wednesday, November 13, 2019 ... more
Lies we tell ourselves
“Nothing is easier than self-deceit” said Demostenes. “For what each man wishes, he also believes to be true." Perhaps nowhere is that more evident than in the stock market. “Every day apparently intelligent people essentially declare themselves
Tuesday, November 12, 2019 ... more
Charts lie too
In his book, “How Charts Lie”, Alberto Cairo, Professor of Visual Journalism at the University of Miami, warns that a slick chart can add a veneer of authority to shoddy or misleading data. “For some reason people assume that numbers and
Tuesday, November 12, 2019 ... more
Reduce its rating
The world you are about to enter doesn’t have a good reputation. It’s not a nice place, as you are soon to find out... Still, it’s the only world available; no alternative exists, and if one did, there is no guarantee that it would be much better than this one.
Friday, November 8, 2019 ... more
Like a pig
The first thing I heard when I got in the business was bulls make money, bears make money, and pigs get slaughtered. I'm here to tell you I was a pig. And I strongly believe the only way to make long-term returns in our business that are superior
Thursday, November 7, 2019 ... more
On a re-read
Upon a re‐read of the seminal Security Analysis, which Benjamin Graham and David Dodd published in 1934, one learns that many of Graham’s insights were not simply confined to balance sheets and income statements. In fact
Wednesday, November 6, 2019 ... more
This month a small group of researchers will feverishly devote themselves to unmasking the shadowy forces that control the world. At month end they will reveal a series of shocking conspiracies that only the most paranoid could possibly
Tuesday, November 5, 2019 ... more
Traders play around with bid/ask spreads to create the illusion of big buying or selling. If you look at bid/ask quotes you might see large buy orders just below the current bid, or sell orders just above the current offer. Traders put in
Tuesday, November 5, 2019 ... more
Let’s imagine for a moment that we’ve reached the middle of the century. It’s 2050, and we have a moment to reflect—the climate fight remains the consuming battle of our age, but its most intense phase may be in our rear-view mirror. And so we can
Friday, November 1, 2019 ... more
The company they keep
In 2005, three academics published a remarkable paper. "Judging Fund Managers by the Company They Keep" by Randolph Cohen, Joshua Coval, and Lubos Pastor, debuted a powerful method of forecasting the future performance of
Thursday, October 31, 2019 ... more
Temperament has the power to accelerate or demolish all efforts. It doesn’t matter how intelligent you are, how much knowledge you have, how deep your wisdom, or how powerful your discernment, if you have a natural temperament that
Wednesday, October 30, 2019 ... more
Rejecting Munger
“It shows how hard it is to be rational on something very simple,” said Charlie Munger at this year’s Daily Journal Annual Meeting. “How many kind of crazy ideas people have that don’t work, and you don’t even know why they don’t work
Tuesday, October 29, 2019 ... more
Charlie on indexing
Another issue of course that’s happened in the world of stock picking is that we’ve had a really horrible thing happen to the investment counselling class. And that is these index funds have come along and they basically beat everybody
Tuesday, October 29, 2019 ... more
A good boss
The first banana-skin which a lot of fellows step on when they're put over other men is a desire to be too popular. Of course, it's a nice thing to have everyone stand up and cheer when your name is mentioned, but it's mighty seldom that that happens to anyone
Friday, October 25, 2019 ... more
Robo value investor
Havelock London has an ambitious mission: to mesh computer science with the Sage of Omaha’s “value investing” principles. Instead of trading in and out of stocks at a moment’s notice, or trying to ride hot market themes
Thursday, October 24, 2019 ... more
Holy Grail
According to one Grail account, there is an on-going war in heaven between God and Satan. The Grail has been placed in the middle of the conflict by neutral angels. Thus, it exists in the midst of a spiritual path between pairs of opposites
Wednesday, October 23, 2019 ... more
“Reversion to the mean is one of the most common stories in history,” says Morgan Housel at Collaborative Fund. “It’s the main character in economies, markets, countries, companies, careers – everything.” Whether or not that’s entirely true
Tuesday, October 22, 2019 ... more
What we know — that we know: We know the past performance of proposed investments. We know, all else being equal, lower expenses lead to higher returns. We know diversifying across asset classes can reduce risk. We know the benefits
Monday, October 21, 2019 ... more
History Lesson
The Great Depression began with a stock market crash. October 24th, 1929. That’s the story, at least. It makes for a good story because it’s a specific event on a specific day. But if you were to go back to October 1929, during the crash
Friday, October 18, 2019 ... more
How long?
Ben Graham is famously attributed for stating that the market was a voting machine in the short term, but a weighing machine in the long term. By that, I believe he may have meant that psychology and emotion can sometimes cause Mr Market
Thursday, October 17, 2019 ... more
Dangerous voyage
A reminder of something Jeremy Grantham at GMO put out in 2012 for “individual investors setting out on dangerous investment voyages”: In investing Santayana is right: History repeats and repeats. All bubbles break, all investment frenzies
Wednesday, October 16, 2019 ... more
Truth be told
The right decision often only needs one good reason to validate it. Adding additional reasons may make us feel better, but it doesn’t necessarily make our decision any better. More analysis, likewise, will not necessarily produce better results
Tuesday, October 15, 2019 ... more
7 traits
In 2007, Mark Sellers of Sellers Capital told a class of Harvard MBAs that there are at least seven traits shared by great investors that are true sources of competitive advantage, because they can’t be learned once a person reaches adulthood
Tuesday, October 15, 2019 ... more
Questionable beliefs
It is a great discredit to humankind that a species as magnificent as the rhinoceros can be so endangered. Unhappily the rhinoceros is not alone in this. Some years ago 600 bears were killed in the Great Smoky Mountains for their
Friday, October 11, 2019 ... more
From T Boone Pickens
My wealth was built through some key principles, including: A good work ethic is critical. Don’t think competition is bad, but play by the rules. I loved to compete and win. I never wanted the other guy to do badly; I just wanted to do a little better
Thursday, October 10, 2019 ... more
From Charlie
Now...we've done better than average. And why has that happened? And the answer is pretty simple. We tried to do less. We never had the illusion we could just hire a bunch of bright young people and they would know more than anybody
Wednesday, October 9, 2019 ... more
Red flags
What can go wrong with an investment? The short answer is pretty much anything. So anyone who fails to approach a stock purchase without first assessing the worst-case scenario is asking for trouble. No one likes to think about the pitfalls
Tuesday, October 8, 2019 ... more
Don't do, do
The legendary investor Philip Fisher developed a reputation for finding a few good investments, buying as many shares in them as he could, and holding them indefinitely. Fisher once claimed that only 6-8 stocks in his portfolio were serious
Tuesday, October 8, 2019 ... more
Folk economics
Most of us have little or no education in economics, but that doesn’t stop us holding beliefs about all sorts of things from the benefits of international trade, the origins of inequality, to the power of big business, and the consequences of regulation.
Friday, October 4, 2019 ... more
Short sellers
I used to think that good short-sellers could be trained like long-focused value investors because it should be the same skill set; you’re tearing into the numbers, you’re valuing the businesses, and hopefully you’re seeing something the market
Thursday, October 3, 2019 ... more
Can only follow
When it comes to buying and selling stocks, there is no such thing as “putting it over.” The market is relentless. It cannot be budged by our sophistries. It will respond exactly to the forces and personalities which are working upon it, with no more
Wednesday, October 2, 2019 ... more
How & why
“Whenever you’re dealing with a bad situation, evasiveness, euphemisms and reassuring language may make you feel better, but they’re likely to strike the wrong tone,” warns Anett Grant, President of U.S. based Executive Speaking
Tuesday, October 1, 2019 ... more
Investors are often lured into a poor decision by a compelling story and no financial bubble in history has been absent some beguiling narrative – yet, their importance remains hugely understated. The human brain’s reliance on narratives
Tuesday, October 1, 2019 ... more
Michel Pireu & Associates cc, the owners of this website, are active stockmarket traders. The company disclaims all liability for any loss, damage, injury or expense however caused, arising from the use of, or reliance upon, in any manner, the information provided through this service and does not warrant the truth, accuracy or completeness of the information provided. The company's permission is required to reproduce the contents in any form including, capture into a database, website, intranet or extranet.