What A Strange Investing Environment We Are In!
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The investing environment we find ourselves in today is like some strange, twisted forest where old rules seem to no longer apply.
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Warren Buffett’s Big Investing Mistake
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Warren Buffett is the world’s most successful investor. Yet, even the best make mistakes, as any good investor knows. Analyzing Warren Buffett’s mistakes in depth can make you a better investor. In the just-released 2020 Berkshire Hathaway annual letter, Buffett briefly tells us about a recent, big, mistake: Precision Castparts (“PCC”). Let’s dive in and see what we can learn.
Read More3 and a Half Insights from Charlie Munger at the 2021 Daily Journal Annual Meeting
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Charlie Munger answered questions for two hours today at the 2021 Daily Journal Annual Meeting. The topics ranged from the current investing environment to worldly wisdom, and there was something to learn for everyone.
Read MoreWhat’s Missing From Howard Marks’ “Something Of Value”
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I have been a long-time reader of Howard Marks’ memos, which I find to be insightful, and this one, titled “Something of Value” was no different. In fact, I think this was one of Marks’ best memos. And yet, there were also several important things missing, which if not discussed are likely to leave the readers with an incomplete understanding of the subject.
Read More5 Investing Insights from Charlie Munger (2020)
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Charlie Munger is an amazing investor and Warren Buffett’s partner at Berkshire Hathaway. He recently gave an interview to CalTech alumni that has a lot to teach us about investing.
Read MoreAre Value Investors Just Missing Growth Stocks?
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“What is going to cause this stock to get re-valued by the stock market?” This is a question that I hear a lot from my frustrated value investor friends. It is asked with equal exasperation about stocks that are incredibly cheap relative to their profit levels and ones that are astronomically expensive relative to any fundamental measure.
Read More5 Bubble Signs That Should Make You Cautious
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What are the signs that there might be a bubble in the stock market? In investing, patterns repeat. We have seen these signs before during past bubbles, and now they are all present again.
Read MoreHow Can We Be Sure That Value Investing Will Continue To Work?
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We cannot be sure that value investing will work. What has worked in the past is not predictive of what will work in the future. However, if we dig deeper into why value investing has worked for a long time, we are likely to get insights into what may or may not continue to work in the future.
Read MoreThe Problem With The 60/40 Portfolio
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If your money is invested with a financial adviser, there is a good chance that it’s deployed in some variation of the 60/40 portfolio. That has been the conventional approach for decades. Unfortunately, the results for such a portfolio in the current environment are likely to be unattractive and might not meet your financial goals.
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3 Insights From Warren Buffett at Berkshire Hathaway’s 2020 Annual Meeting
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Warren Buffett is idolized by many as the world’s greatest investor of all time. This is well-deserved based on the amazing amount of wealth that he has created for himself and others over decades. Unfortunately, if you were expecting that Buffett’s wisdom at Berkshire Hathaway’s 2020 annual meeting was going to yield easy answers about the current investment landscape, you are likely to be disappointed.
Read MoreWhy Risk Management Will Not Produce The Best Investing Returns
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Risk management will not produce the best returns.
What?? Then why do it? Because we don’t know the future.
Read MoreHow To Invest Safely Amidst the Coronavirus Market Meltdown
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Fear is rampant. Investors are reverting to their worst behavioral biases and habits in such an environment. You need to do better than the crowds and continue to invest rationally. Here is how.
Read More5 Insights from Charlie Munger at the 2020 Daily Journal Annual Meeting
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“The current stock market situation is not as crazy as the Nifty Fifty or the Tech Bubble of the late 1990s.”
Read MoreWhat You Can Learn from an Unusual Investment
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The company was a spin-off from a healthcare company, one that I have followed for almost 15 years. After months of research and following a collapse in the stock price, an opportunity finally presented itself.
Read More10 Important Questions to Consider Before Investing in a Company
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1. Do I understand the business?
2. Can I (approximately) estimate the key financial characteristics 10 years out?
3 …
Read MoreToday’s Financial Bubbles: Avoiding Colossal Loss In A Strange Investment Climate
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This is as precarious an investment environment as any that I have experienced during my two decades of investing. Prices of many securities and asset classes are optimistic, in some cases bordering on irrational. When the pendulum of the market swings so far towards greed, we need to be even more careful than we usually are in our capital allocation. Just because most market participants are in a generous mood does not decrease the amount of uncertainty facing businesses. What it does is make it very easy to lose large amounts of money and hard to make good returns.
Read MoreThe Capital Allocation Guide for CEOs
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Too many CEOs don't understand capital allocation. They rose up through the sales or operations ranks, and now that they are at the top they have to wing it with respect to one of the most important aspects of running the business. Don’t get me wrong – there are some amazing capital allocators among CEOs. However, in my two decades of investing experience I have come to believe that they are a small minority. The rest have never learned capital allocation from first principles, and instead rely on a combination of conventional “wisdom” and advisors with questionable motivations. The purpose of this guide is to try to change this to help improve capital allocation across the corporate world.
Read MoreHow I Spotted a Fraud (Before It Was Too Late)
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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.
Read MoreWhat You Can Learn From My 50% Loss
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I was a young equity analyst at one of the largest mutual fund firms in the country. It was the week before Christmas in 2002, and my most important stock recommendation to the firm’s portfolio managers had just declined by 50%. In one day.
Read MoreHow Long Will My Money Last?
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Your money is unlikely to last you as long as most savings withdrawal calculators will tell you. That famous 4% withdrawal rule? Not so fast, especially not in the current environment. Before you entrust your retirement to some over-simplified rule of thumb, you should understand what’s really involved and what you need to know in today’s low-return investing climate.
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