Tag Archives: Behavioral Finance

Truly Honored by Jason Zweig’s Selection of this Blog

I am truly honored to have been selected by Jason Zweig of the Wall Street Journal as one of a handful of investors that Jason thinks are “Smart People for Investors to Follow.” This Margin of Safety blog can be … Continue reading

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B. Malkiel Cannot Believe His Own Eyes

“Over the past 100 years the returns from smaller companies have exceeded those of larger companies. It is also true that stocks with low valuations (i.e. lower prices relative to earnings and book values) have generated better returns than those … Continue reading

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Contemporary Art Auctions Reach Records

Liquidity, both physical and financial, tends to take the path of least resistance. If it is easy for corporations to borrow in public debt markets because high liquidity keeps interest rates low (in the near term), corporations that lack ideas for organic … Continue reading

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There was No “De-Leveraging”

Ray Dalio of Bridgewater is fond of calling our government bailout a “beautiful deleveraging” (http://www.bwater.com/Uploads/FileManager/research/deleveraging/an-in-depth-look-at-deleveragings–ray-dalio-bridgewater.pdf) probably because he bet correctly that the flood of liquidity would lift all boats in the short run. But, I have been arguing the point in … Continue reading

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Bloomberg Article on the Myopia of Buying a Vacation Home

When viewing a vacation home as an investment, most fail to account for all of the costs associated with home ownership. Even after the investment is sold, people overestimate their return because they fail to track all of the costs. In most … Continue reading

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The Market and the Economy Mid-Year 2014: A Top-Down View

I have excerpted part of PAR’s semi-annual letter that PAR sent to clients on July 7, 2014, and I have pasted it below. No one knows where the market is going to end up in the near term, but over the … Continue reading

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What is the Effect of a Label? Smart Beta Makes Bill Sharpe “Sick”

Bill Sharpe gave us the Sharpe Ratio to help determine whether an active investment manager is “beating” the market after adjusting for the risk that the manager assumed. Sharpe is from the Efficient Market school of academia, which believes that markets are … Continue reading

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The Guilty and Gullible Revealed

The WSJ published another great Review section in today’s Weekend edition. The lead article was an excerpt from University of Chicago economist Levitt and Dubner’s upcoming book. The excerpt was from a chapter on tricking the guilty and the gullible to … Continue reading

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Howard Marks: The Top-Ten Qualities that Make Warren Buffett Different from Most Investors

The following are bullet points reproduced (and numbered by order of appearance) from Howard Marks’s Forward to the third edition of The Warren Buffett Way, by Robert G. Hagstrom. Marks writes a couple of paragraphs to elaborate on each bullet point, … Continue reading

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A Classic Example of Why Discipline and Wealth Go Hand-in-Hand

A great quote from The Warren Buffett Way, Third Edition, (2014) by Robert G. Hagstrom. The difference between Warren Buffett and most investors has more to do with discipline than just about any other quality. There are plenty of smart investors, … Continue reading

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