How I Spotted a Fraud (Before It Was Too Late)

How I Spotted a Fraud (Before It Was Too Late)

I couldn’t fall asleep. As I was tossing in bed, I felt that I almost had it figured out. Figured out what was wrong with the company that I had recommended that the investment firm that I had worked for invest tens of millions of dollars in. That was before my mind started to put the pieces together and warn me that something wasn’t quite right. And then I had it: the management team was manipulating earnings to make them seem much larger than they really were, and I had just figured out exactly how they were doing it.

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How to Invest for the Long-Term in a Turbulent Market

How to Invest for the Long-Term in a Turbulent Market

Long-term investing doesn’t happen by accident. You need to be prepared. There are three things that can allow you to use market volatility to your advantage: the right structure, a long-term investment process and a behavioral checklist to allow you to remain rational when everyone else is being anything but.

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Don’t Make These 5 Investing Mistakes That General Electric Investors Made

Don’t Make These 5 Investing Mistakes That General Electric Investors Made

If GE investors had been told about the recent challenges at the company 15 years ago, would any of them have believed them to be possible? Investors who invested in GE stock 15 years ago have lost more than 40% of their capital through the end of October 2018. This compares with a gain of over 250% over the same time period in the S&P 500 index, which tracks the performance of large U.S. stocks. What can we learn from the challenges at GE to become better investors?

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Circle of Competence

Circle of Competence

Warren Buffett wrote in his 1996 letter to Berkshire Hathaway shareholders: “You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.

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5 Exemplary CEO Annual Letters Worth Reading

5 Exemplary CEO Annual Letters Worth Reading

What makes a great annual letter from the CEO to the shareholders? The typical, generic annual letter that I read adds little to the numbers and sometimes obfuscates more than it illuminates. The best letters go beyond the numbers and help shareholders get a deeper understanding of the company, how it is performing and the decision-making process the management team employs. In this article I examine the aspects of a great annual letter and provide five examples.

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Portfolio Concentration: How Much Is Optimal?

Portfolio Concentration: How Much Is Optimal?

Diversification is sometimes described as “the only free lunch” in investing. But is it? Not in the kind of fundamental value investing that I do.

Increased diversification comes with two potential costs:

  1. At a certain point, new investments are likely to yield increasingly lower returns.

  2. The time required to underwrite new investments reduces the quality of the underwriting of existing investments.

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Balancing Conviction and Flexibility in Investing

Balancing Conviction and Flexibility in Investing

Conviction is a necessary quality for any investor – lack thereof can lead to an inability to stay the course on a successful contrarian investment. Yet without flexibility investors can easily fall prey to various behavioral biases such as anchoring and overconfidence and fail to correctly change their minds when the evidence merits doing so.

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What Do the Best Investors Do That the Rest Don’t?

What Do the Best Investors Do That the Rest Don’t?

Charlie Munger, the Vice Chairman of Berkshire Hathaway and Warren Buffett’s partner said something simple yet profound at the 2017 Berkshire Hathaway Annual Meeting: “A lot of other people are trying to be brilliant and we are just trying to stay rational. And it’s a big advantage.” Some might think that becoming an excellent investor requires off-the-charts intelligence or some highly proprietary model that leads to an edge that nobody else can replicate. That is not what experience has shown.

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How and Why to Be a Long-Term Investor

How and Why to Be a Long-Term Investor

Having a long-term time horizon can help you avoid making poor short-term investment decisions. A multi-year time horizon can also give you an advantage toward achieving superior returns by allowing you to make high-potential investments that others with a shorter timeframe would avoid. This article will elaborate on why being a long-term investor can help you achieve better returns, and illustrate how you can go about doing so.

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Why Passive Investing Is an Excellent Default Choice – an Active Investor’s View

Why Passive Investing Is an Excellent Default Choice – an Active Investor’s View

Passive investing – replicating the market’s returns through low-cost index funds or exchange-traded funds (ETFs) – has finally gained a meaningful share of the market. However there are still many investors who attempt to beat the market by investing with higher-fee active investment managers or directly in individual securities.

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