Tag Archives: Behavioral Finance

So, You Think You Can Be a Great Short Seller

I am about to cover the final leg of my NFLX short, which I had in place for over one year. Are you one of the many who saw this coming? Did you expect a 75% drop in price since … Continue reading

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Power Laws at Work in Financial Markets

I am working on a good post for the first “Counterfactual Friday.” Unfortunaltely it will probably not be posted until Monday. In the meantime enjoy the following: I have attached a link to a terrific article on power law distributions and … Continue reading

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Just What is Seth Klarman up to? It May not be What Optimists Believe

Apparently, Seth Klarman is in the market for capital. This is always news because Klarman has a reputation for shunning capital from new investors and frequently returning excess capital to existing investors. However, the author of the attached story has … Continue reading

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Rumors Drive the Market Upward Again

As I have written before, any news rumor is good news for the market; the aftershock of disappointment is likely to be much more pronounced. From a Dow Jones Newsire report published online at 5:17pm today: On Tuesday, the market … Continue reading

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Why All the Cheer?

I am an optimist by nature, and I hope a rational one in the Matt Ridley vein. But, I do not understand the optimism in the market in the last seven trading days (plus forty-five minutes). Markets are up over … Continue reading

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An Academic’s Take on the Value Premium

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 … Continue reading

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Moneyball

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 … Continue reading

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Another Great One by James Montier

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 … Continue reading

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The Investing World’s Reaction to Buffett’s Hiring of Richard “Ted” Weschler

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: … Continue reading

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Market Valuation, Deus Ex Machina, and Volatility

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 … Continue reading

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