This is an interesting view of the value premium–the amount by which value stocks’ risk-adjusted returns exceed glamour stocks’ risk-adjusted returns–written by an academic, Tano Santos, who has no apparent horse in the race. We use the term “glamour” instead of “growth” because all value investors love growth, they just refuse to overpay for it.
“…Using monthly data stretching back more than four decades, we find that the… Continue reading
Anyone who has studied Austrian School economics–Böhm-Bawerk, Hayek, von Mises, etc.–will not be surprised by Andy Kessler’s comments on the source of real social progress: Virtually all of it comes from our entrepreneurs who invent and create the goods and services that improve our standard of living minute-by-minute. The main source of fuel for their creativity–but certainly not the only one–is the political and economic freedom that is… Continue reading
I have attached a link to video of the Japanese tsunami videotaped by a driver in a car. A reminder that real risk is devastation that no one can see coming and that no one can prevent. (H/T: Infectious Greed)… Continue reading
I found out last week that in my industry, the new Dodd-Frank law says that if I decide to manage investments in separately managed accounts (SMA) for my investors in addition to the private investment fund that I currently manage, it will trigger a requirement to register with the SEC as an Investment Advisor. Needless to say, registration will cost tens, if not hundreds of thousands of dollars each year just… Continue reading
I love value investing for the edge that it gives me, and I love baseball. Michael Lewis is a brilliant writer who once worked in my old insustry (mortgage backed securities) at Salomon Brothers. During his time at Salomon, Perelman attempted a takover, and Gutfreund, Salomon’s CEO, enlisted the help of Warren Buffett to stave off Perelman. Lewis knows a thing or two about value investing.
Lewis, of… Continue reading
Read the whole thing:
http://www.ft.com/intl/cms/s/0/77f0077c-c35a-11e0-9109-00144feabdc0.html#axzz1YtylE6lL
“…there is a simple, although not easy…alternative (to benchmark-focused investing)…use a value approach across a wide range of assets. Buy when an asset is cheap, and sell when an asset gets expensive – buy low and sell high, a sensible approach to both the preservation and growth of capital.
Valuation is the primary determinant of long-term returns, and the… Continue reading
I am surprised at the reaction among investors and the media over Buffett’s selection of Ted Weschler as one of his portfolio management successors, but I suppose I should be used to it by now. The general reaction has been:
We have written several times to say that the market in general is overvalued based on earnings (the CAPE) and book value (Tobin’s Q). Even after the recent selloff, the market is still well above long-term averages. However, astute market watchers know that although there is a tendency for the market to move toward fundamental averages, there are never guarantees about when they will move and being too… Continue reading
I used to own Fairfax Financial, which smartly shorted financial stocks and bonds–to the tune of several billion dollars–before they blew up. Here is an enjoyable interview of its CEO–Prem Watsa, CFA–who is a value investor who is sometimes referred to as the Warren Buffett of Canada. The interview was found in CFA Magazine.
http://viewer.zmags.com/publication/d1f7adef#/d1f7adef/36
I am somewhat surprised by this because I thought he was less than 50% net long. (Correction: Tilson made changes to the fund in August which resulted in the fund being 70% net long). Covering his NFLX short may have hurt a little (especially after today’s after-hours news) but a 70% net long position should have outperformed the market. I am also a little suprised by his comment about… Continue reading
