From Value Investor Insight: Oaktree Capital Chairman Howard Marks often credits a 1975 article in The Financial Analysts Journal as a key contributor to his investment thinking. In the article, titled “The Loser's Game,” investing legend Charles Ellis argued that increased competition among highly skilled professional investors had turned investing from a Winner's Game, in which the aggressive, deliberate actions of a privileged view could generate consistent outsized returns, to a Loser's Game, where the emphasis must shift toward making fewer mistakes than others. The numbers made a good case for passive investing, he wrote, but citing his own experience and the work of scientist Simon Ramo, historian Admiral Samuel Elliot Morrison and professional golf instructor Tommy Armour, Ellis does offer some specific advice to those determined to try to win the Loser's Game.
http://www.valueinvestorinsight.com/pdfs/TheLosersGame.PDF
For more information - go to Value Investor Insight May 27th 2011.
Sunday, May 29, 2011
Charly Munger - "Academic Economics: Strengths and Faults After Considering Interdisciplinary Needs"
Herb Kay Undergraduate Lecture University of California, Santa Barbara Economics Department By Charles T. Munger October 3, 2003
http://www.tilsonfunds.com/MungerUCSBspeech.pdf
Introduction by Rajnish Mehra......................................................................................................1
Munger’s Opening Remarks:.........................................................................................................1
Non-use of Efficient Market Theory at Berkshire.............................................................2
Personal Multidisciplinary Education................................................................................3
The Obvious Strengths of Academic Economics..............................................................4
What’s Wrong with Economics.........................................................................................5
1) Fatal Unconnectedness, Leading To “Man With A Hammer Syndrome,” Often Causing Overweighing What Can Be Counted...........5
2) Failure To Follow The Fundamental Full Attribution Ethos of Hard Science.......................................................................................................6
3) Physics Envy..............................................................................................7
Washington Post case study.......................................................................7
Einstein and Sharon Stone.........................................................................7
4) Too Much Emphasis on Macroeconomics.................................................8
Case study: Nebraska Furniture Mart’s new store in Kansas City...........8
Case study: Les Schwab Tires..................................................................9
Causes of problem-solving success...........................................................9
5) Too Little Synthesis in Economics..........................................................10
6) Extreme and Counterproductive Psychological Ignorance......................13
7) Too Little Attention to Second and Higher Order Effects.......................14
Mispredicting Medicare costs..................................................................14
Investing in textile looms.........................................................................14
Workman’s comp madness......................................................................15
Niederhoffering the curriculum...............................................................15
8) Not Enough Attention to the Concept of Febezzlement..........................17
9) Not Enough Attention to Virtue and Vice Effects...................................18
Religion....................................................................................................18
Pay for directors and judges.....................................................................18
Not a vice that some systems are deliberately made unfair.....................19
Contributions of vice to bubbles..............................................................19
Paradoxical good contributions from vice; the irremovability of paradox.........................................................................................19
Conclusion......................................................................................................................20
Clinging to failed ideas – a horror story..................................................20
Repeating the big lesson..........................................................................21
Q & A ..............................................................................................................................21
http://www.tilsonfunds.com/MungerUCSBspeech.pdf
Introduction by Rajnish Mehra......................................................................................................1
Munger’s Opening Remarks:.........................................................................................................1
Non-use of Efficient Market Theory at Berkshire.............................................................2
Personal Multidisciplinary Education................................................................................3
The Obvious Strengths of Academic Economics..............................................................4
What’s Wrong with Economics.........................................................................................5
1) Fatal Unconnectedness, Leading To “Man With A Hammer Syndrome,” Often Causing Overweighing What Can Be Counted...........5
2) Failure To Follow The Fundamental Full Attribution Ethos of Hard Science.......................................................................................................6
3) Physics Envy..............................................................................................7
Washington Post case study.......................................................................7
Einstein and Sharon Stone.........................................................................7
4) Too Much Emphasis on Macroeconomics.................................................8
Case study: Nebraska Furniture Mart’s new store in Kansas City...........8
Case study: Les Schwab Tires..................................................................9
Causes of problem-solving success...........................................................9
5) Too Little Synthesis in Economics..........................................................10
6) Extreme and Counterproductive Psychological Ignorance......................13
7) Too Little Attention to Second and Higher Order Effects.......................14
Mispredicting Medicare costs..................................................................14
Investing in textile looms.........................................................................14
Workman’s comp madness......................................................................15
Niederhoffering the curriculum...............................................................15
8) Not Enough Attention to the Concept of Febezzlement..........................17
9) Not Enough Attention to Virtue and Vice Effects...................................18
Religion....................................................................................................18
Pay for directors and judges.....................................................................18
Not a vice that some systems are deliberately made unfair.....................19
Contributions of vice to bubbles..............................................................19
Paradoxical good contributions from vice; the irremovability of paradox.........................................................................................19
Conclusion......................................................................................................................20
Clinging to failed ideas – a horror story..................................................20
Repeating the big lesson..........................................................................21
Q & A ..............................................................................................................................21
How to download earning calls
http://www.valueuncovered.com/how-to-guide-for-downloading-earnings-calls
Download earnings calls and listen to them in your car.
Download earnings calls and listen to them in your car.
Khaner: Why Some Smart Investors Hold Gold
From 2010 - Khaners view of the drivers of rising gold prices
Monday, May 2, 2011
Saturday, April 9, 2011
Saturday, March 12, 2011
Monday, March 7, 2011
EV/FCF screening tool
http://www.gurufocus.com/forum/read.php?1,37196,97987
Yahoo´s stock screener includes a EV/FCF option.
Valuation --> EV/FCF
screener.finance.yahoo.com
Yahoo´s stock screener includes a EV/FCF option.
Valuation --> EV/FCF
screener.finance.yahoo.com
Saturday, March 5, 2011
Seeking Alpha: 9 Stocks With Low P/FCF Ratios, Boosted by Insider Buying
The following is a list of stocks that are trading at a Price to Free Cash Flow (P/FCF) ratio lower than 5. In other words, these stocks appear to be undervalued, with free cash flow making up more than 20% of each company's overall valuation.
AEL / AOL / CLW / CNO / ESI / GY / MCGC / PMC / SVUhttp://seekingalpha.com/article/252847-9-stocks-with-low-p-fcf-ratios-boosted-by-insider-buying?source=msn
Thursday, March 3, 2011
Point Lobos Holdings 12/31/2010
http://www.sec.gov/Archives/edgar/data/1512314/0001140361-11-007899.txt
FORM 13F INFORMATION TABLE
COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 COLUMN 5 COLUMN 6 COLUMN 7 COLUMN 8
- --------------------------------- -------------- --------- -------- ------------------ ---------- -------- ---------------------
VALUE SHRS OR SH/ PUT/ INVESTMENT OTHER VOTING AUTHORITY
NAME OF ISSUER TITLE OF CLASS CUSIP (x$1000) PRN AMT PRN CALL DISCRETION MANAGERS SOLE SHARED NONE
- --------------------------------- -------------- --------- -------- --------- --- ---- ---------- -------- --------- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A D A M INC COM 00088U108 1,821 253,591 SH SOLE 253,591 0 0
CLEARWATER PAPER CORP COM 18538R103 3,418 43,652 SH SOLE 43,652 0 0
EDCI HLDGS INC COM STK COM 268315207 110 37,240 SH SOLE 37,240 0 0
HEALTH NET INC COM STK COM 42222G108 8,696 318,642 SH SOLE 318,642 0 0
IESI BFC LTD COM STK COM 44951D108 8,359 343,990 SH SOLE 343,990 0 0
IMATION CORP COM STK COM 45245A107 2,294 222,474 SH SOLE 222,474 0 0
LYONDELLBASELL INDUSTRIES N SHS - A - N53745100 4,983 144,841 SH SOLE 144,841 0 0
MATRIXX INITIATIVES INC COM STK COM 57685L105 2,761 326,397 SH SOLE 326,397 0 0
MEDCATH CORP COM STK COM 58404W109 1,105 79,186 SH SOLE 79,186 0 0
NORDION INC COM COM 65563C105 25,651 2,252,039 SH SOLE 2,252,039 0 0
RADWARE LTD COM STK ORD M81873107 1,913 51,000 SH SOLE 51,000 0 0
SAUER-DANFOSS INC COM STK COM 804137107 3,477 123,095 SH SOLE 123,095 0 0
SHAW GROUP INC COM STK COM 820280105 15,034 439,200 SH SOLE 439,200 0 0
TECUMSEH PRODUCTS COCL A COM STK CL A 878895200 905 69,379 SH SOLE 69,379 0 0
TRANSOCEAN LTD REG SHS H8817H100 6,935 99,770 SH SOLE 99,770 0 0
TRIMERIS INC COM STK COM 896263100 2,284 928,632 SH SOLE 928,632 0 0
WELLCARE HEALTH PLANS INC COM STK COM 94946T106 20,464 677,156 SH SOLE 677,156 0 0
FORM 13F INFORMATION TABLE
COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 COLUMN 5 COLUMN 6 COLUMN 7 COLUMN 8
- --------------------------------- -------------- --------- -------- ------------------ ---------- -------- ---------------------
VALUE SHRS OR SH/ PUT/ INVESTMENT OTHER VOTING AUTHORITY
NAME OF ISSUER TITLE OF CLASS CUSIP (x$1000) PRN AMT PRN CALL DISCRETION MANAGERS SOLE SHARED NONE
- --------------------------------- -------------- --------- -------- --------- --- ---- ---------- -------- --------- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A D A M INC COM 00088U108 1,821 253,591 SH SOLE 253,591 0 0
CLEARWATER PAPER CORP COM 18538R103 3,418 43,652 SH SOLE 43,652 0 0
EDCI HLDGS INC COM STK COM 268315207 110 37,240 SH SOLE 37,240 0 0
HEALTH NET INC COM STK COM 42222G108 8,696 318,642 SH SOLE 318,642 0 0
IESI BFC LTD COM STK COM 44951D108 8,359 343,990 SH SOLE 343,990 0 0
IMATION CORP COM STK COM 45245A107 2,294 222,474 SH SOLE 222,474 0 0
LYONDELLBASELL INDUSTRIES N SHS - A - N53745100 4,983 144,841 SH SOLE 144,841 0 0
MATRIXX INITIATIVES INC COM STK COM 57685L105 2,761 326,397 SH SOLE 326,397 0 0
MEDCATH CORP COM STK COM 58404W109 1,105 79,186 SH SOLE 79,186 0 0
NORDION INC COM COM 65563C105 25,651 2,252,039 SH SOLE 2,252,039 0 0
RADWARE LTD COM STK ORD M81873107 1,913 51,000 SH SOLE 51,000 0 0
SAUER-DANFOSS INC COM STK COM 804137107 3,477 123,095 SH SOLE 123,095 0 0
SHAW GROUP INC COM STK COM 820280105 15,034 439,200 SH SOLE 439,200 0 0
TECUMSEH PRODUCTS COCL A COM STK CL A 878895200 905 69,379 SH SOLE 69,379 0 0
TRANSOCEAN LTD REG SHS H8817H100 6,935 99,770 SH SOLE 99,770 0 0
TRIMERIS INC COM STK COM 896263100 2,284 928,632 SH SOLE 928,632 0 0
WELLCARE HEALTH PLANS INC COM STK COM 94946T106 20,464 677,156 SH SOLE 677,156 0 0
Monday, February 28, 2011
Sunday, February 27, 2011
Article about Shelby Davis
Track record: 23% compounded annual growth for 47 years.
"Although he deviated somewhat from insurance companies over his lifetime 11/12 most successful investments were still in that industry. These included AIG, the four Japanese companies above, Berkshire Hathaway, AON, Torchmark, Chubb, Capital Holdings, and Progressive. The odd man out was Fannie Mae. He had some other minor successes but the bulk of his portfolio was due to these 12. If anything can be learned from his investing it’s that holding a few big winners for a long time can go a long way."
http://www.fwallstreet.com/article/1583-shelby-davis-a-spectacular-unknown-value-investor#more-1583
"Although he deviated somewhat from insurance companies over his lifetime 11/12 most successful investments were still in that industry. These included AIG, the four Japanese companies above, Berkshire Hathaway, AON, Torchmark, Chubb, Capital Holdings, and Progressive. The odd man out was Fannie Mae. He had some other minor successes but the bulk of his portfolio was due to these 12. If anything can be learned from his investing it’s that holding a few big winners for a long time can go a long way."
http://www.fwallstreet.com/article/1583-shelby-davis-a-spectacular-unknown-value-investor#more-1583
A day with Warren Buffett
WSJ Article: Warren Buffett, Unplugged
Excerpts:
He chatted briefly with his assistant, then hurried into his modest-size office and shut the door. There is no computer in there, nor is there a stock-quote machine or stock-data terminal. He keeps a muted television set tuned to CNBC, the financial-news network. Although he occasionally carries a cellphone on the road, he does not use one in Omaha. He keeps no calculator on his desk, preferring to do most calculations in his head. "I deplore false precision in math," he says, explaining that he does not need exact numbers for most investment decisions. On the cabinet behind his desk are two black phones with direct lines to his brokers on Wall Street.
http://www.cb.wsu.edu/~nwalcott/finance325/template/readings/WSJ.com%20-%20Warren%20Buffett,%20Unplugged.pdf
Excerpts:
He chatted briefly with his assistant, then hurried into his modest-size office and shut the door. There is no computer in there, nor is there a stock-quote machine or stock-data terminal. He keeps a muted television set tuned to CNBC, the financial-news network. Although he occasionally carries a cellphone on the road, he does not use one in Omaha. He keeps no calculator on his desk, preferring to do most calculations in his head. "I deplore false precision in math," he says, explaining that he does not need exact numbers for most investment decisions. On the cabinet behind his desk are two black phones with direct lines to his brokers on Wall Street.
Mr. Buffett has relied on gut instinct for decades to run Berkshire Hathaway Inc. Watch him at work inside his $136 billion investment behemoth, and what you see resembles no other modern financial titan. He spends most of his day alone in an office with no computer. He makes swift investment decisions, steers clear of meetings and advisers, eschews set procedures and doesn't require frequent reports from managers. Occasionally he picks up the phone, calls his broker and trades $100 million or more of stock.
Mr. Buffett deliberately keeps the outside world at bay, believing it is the best way for him to remain "rational" as an investor. If he is interested in investing in a company, he studies the financials himself. "I've created a good environment," he says. "All I have to do is think and not be influenced by others."
http://www.cb.wsu.edu/~nwalcott/finance325/template/readings/WSJ.com%20-%20Warren%20Buffett,%20Unplugged.pdf
Saturday, February 26, 2011
Friday, February 25, 2011
Netflix uses Amazon cloud services
Contrary to statement made by folks like Jim Cramer, Netflix does not have a lock on streaming video. To early in the game to call a winner. Especially when it relies on Amazon services for hosting streaming media. Amazon is a good choice given that they have built out data centers around the world and are arguably the low cost data center provider.
http://blogs.wsj.com/deals/2011/02/22/evening-reading-why-netflix-is-worried-about-amazon/
http://blogs.wsj.com/deals/2011/02/22/evening-reading-why-netflix-is-worried-about-amazon/
John Paulson Portfolio
Company | Shares Held-09/30/2010 | Shares Held-12/31/2010 | % Change in Shares Held | % of Portfolio |
|---|---|---|---|---|
SPDR Gold Shares | 31,500,000 | 31,500,000 | 0.00% | 15.41% |
AngloGold Ashanti (NYSE: AU) | 41,000,000 | 40,949,437 | -0.12% | 7.11% |
Citigroup | 424,000,000 | 413,525,641 | -2.47% | 6.9% |
Bank of America | 137,794,296 | 123,860,951 | -10.11% | 5.83% |
Anadarko Petroleum (NYSE: APC) | 13,400,000 | 21,277,761 | 58.79% | 5.72% |
Hartford Financial Services Group (NYSE: HIG) | 44,000,000 | 43,950,701 | -0.11% | 4.11% |
SunTrust Banks (NYSE: STI) | 29,380,700 | 34,358,412 | 16.94% | 3.58% |
Comcast (Nasdaq: CMCSA) | 40,000,000 | 40,000,000 | 0.00% | 3.1% |
Capital One Financial (NYSE: COF) | 15,000,000 | 18,000,000 | 20.00% | 2.7% |
MGM Resorts International (NYSE: MGM) | 43,800,000 | 43,800,000 | 0.00% | 2.29% |
http://www.fool.com/investing/general/2011/02/24/loading-up-on-gold-john-paulsons-top-portfolio-hol.aspx
Rare earth elements - new capacity coming online - expect excess supply
1) the total production of rare earth elements is 130k tons. of this, japan uses 30k, the US uses 8k, and china uses 90k. these are round numbers, to be sure.
2) the mine that molycorp will bring on-line in the next year will be between 25k and 40k tons. note that this is versus 8k that the US imports...
For more see:
http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/42459
WSJ: Why companies are hoarding cash
"it isn't just management that is making companies sit on too much cash. It is tax policy, too. Congress and the White House are discussing whether the U.S. should follow the rest of the world and stop taxing repatriated offshore earnings from companies that already have paid taxes to foreign governments. Some gnarly technical details will have to be worked out if the repatriation tax is to be reduced or eliminated."
http://online.wsj.com/article/SB10001424052748703803904576152492475125636.html?mod=WSJ_article_MoreIn_Investing
http://online.wsj.com/article/SB10001424052748703803904576152492475125636.html?mod=WSJ_article_MoreIn_Investing
WSJ: Truth about Salesforce.com
Article fails to mention increasing competition from Microsoft Dynamics CRM.
http://online.wsj.com/article/SB10001424052748704150604576166280156761902.html?mod=WSJ_hpp_sections_personalfinance
http://online.wsj.com/article/SB10001424052748704150604576166280156761902.html?mod=WSJ_hpp_sections_personalfinance
Fundamentals
Momentum can carry a hot stock a long way. But at some point, investing fundamentals will surely reassert themselves. They always do.
Sunday, February 20, 2011
The courage to invest differently
Be different
“The hardest thing over the years has been having the courage to go against the dominant wisdom of the time, to have a view that is at variance with the present consensus and bet that view.”
--- Ledgary Hedge Fund Manager Michael Steinhardt
Be a critical thinker
“You can’t be a good value investor without being an independent thinker—you’re seeing valuations that the market is not appreciating. But it’s critical that you understand why the market isn’t seeing the value.”
--- Joel Greenblatt
“The hardest thing over the years has been having the courage to go against the dominant wisdom of the time, to have a view that is at variance with the present consensus and bet that view.”
--- Ledgary Hedge Fund Manager Michael Steinhardt
Be a critical thinker
“You can’t be a good value investor without being an independent thinker—you’re seeing valuations that the market is not appreciating. But it’s critical that you understand why the market isn’t seeing the value.”
--- Joel Greenblatt
Sunday, February 13, 2011
Steve Forbes Interview with Gary Schilling
Gary Schilling on Deleveraging
Basic thesis of most recent book is that Americans are going through a deleveraging phase. This is a healthy development, but it will result in slower economic growth.
Basic thesis of most recent book is that Americans are going through a deleveraging phase. This is a healthy development, but it will result in slower economic growth.
Saturday, February 12, 2011
Gary Kaminksy - Smarter than the street
Seeking Alpha article
Book on Amazon
According to Mr. Kaminsky, individual investors have an edge because they aren't locked in to any specific investing style the way that most mutual fund managers are, so you don't have to be just investing in large caps, or small caps or a particular theme or sector. You can also be more flexible in buying or selling a position than an institution investor because you don't have to wait for a few weeks to purchase or liquidate a large block of shares. He suggests 3-5 hours a week of doing your homework on the Internet of not only the stocks you own, but the overall condition of the economy. He also talks a lot about portfolio structure and utilizes the concentrated portfolio approach where you own no more than 20-30 securities. Anything less and you increase the risk in your holdings, anything more and you become a closet indexer, which doesn't bode well for beating the market.
Book on Amazon
According to Mr. Kaminsky, individual investors have an edge because they aren't locked in to any specific investing style the way that most mutual fund managers are, so you don't have to be just investing in large caps, or small caps or a particular theme or sector. You can also be more flexible in buying or selling a position than an institution investor because you don't have to wait for a few weeks to purchase or liquidate a large block of shares. He suggests 3-5 hours a week of doing your homework on the Internet of not only the stocks you own, but the overall condition of the economy. He also talks a lot about portfolio structure and utilizes the concentrated portfolio approach where you own no more than 20-30 securities. Anything less and you increase the risk in your holdings, anything more and you become a closet indexer, which doesn't bode well for beating the market.
Interview with Bruce Berkowitz - 1/22/2010
Cash - typically 10-20% of holdings. Cash is valuable when market in downturn and nobody has cash. Rule number 1 - don't lose money. Operate a bit on the conservative side because of rule 1.
Friday, February 4, 2011
Saturday, January 22, 2011
Saturday, January 15, 2011
Cramer's Twenty-five Rules for Investing
http://www.thestreet.com/_rmnav/tsc/cramerbook
Rule 1: Bulls, Bears Make Money, Pigs Get SlaughteredIt's essential for all traders to know when to take some off the table.
Rule 2: It's OK to Pay the TaxesStop fearing the tax man and start fearing the loss man because gains can be fleeting. More
Rule 3: Don't Buy All at OnceTo maximize your profits, stage your buys, work your orders and try to get the best price over time.
Rule 4: Buy Damaged Stocks, Not Damaged CompaniesThere are no refunds on Wall Street, so do your research and focus your trades on damaged stocks rather than companies.
Rule 5: Diversify to Control RiskIf you control the downside and diversify your holdings, the upside will take care of itself.
Rule 6: Do Your Stock HomeworkBefore you buy any stock, it's important to research all aspects of the company.
Rule 7: No One Made a Dime by PanickingThere will always be a better time to leave the table, so it is best to avoid the fleeing masses.
Rule 8: Buy Best-of-Breed CompaniesInvesting in the more expensive stock is invariably worth it because you get piece of mind. More
Rule 9: Defend Some Stocks, Not AllWhen trading gets tough, pick your favorite stocks and defend only those. More
Rule 10: Bad Buys Won't Become TakeoversBad companies never get bids, so it's the good fundamentals you need to focus on. More
Rule 11: Don't Own Too Many NamesIt can be constraining, but it's better to have a few positions you know well and like. More
Rule 12: Cash Is for WinnersIf you don't like the market or have anything compelling to buy, it's never wrong to go with cash.
Rule 13: No Woulda, Shoulda, CouldasThis damaging emotion is destructive to the positive mindset needed to make investment decisions.
Rule 14: Expect, Don't Fear CorrectionsIt is not always clear when a correction will strike, so expect and be prepared for one at all times.
Rule 15: Don't Forget BondsIt's important to watch more than stocks, and bonds are stocks' direct competition.
Rule 16: Never Subsidize Losers With WinnersAny trader stuck in this position would do well to sell sinking stocks and wait a day.
Rule 17: Check Hope at the DoorHope is emotion, pure and simple, and trading is not a game of emotion.
Rule 18: Be FlexibleRecognize and be open to the unexpected shifts in the market because business, by nature, is dynamic, not static.
Rule 19: When the Chiefs Retreat, So Should YouHigh-level executives don't quit a company for personal reasons, so that is a sign something is wrong.
Rule 20: Giving Up on Value Is a SinIf you don't have patience, think about letting someone who does run your money.
Rule 21: Be a TV CriticAccept that what you hear on television is probably right, but no more than that.
Rule 22: Wait 30 Days After PreannouncementsPreannouncements signal ongoing weakness, wait 30 days to see if anything has gotten better before you pull the trigger to buy.
Rule 23: Beware of Wall Street HypeNever underestimate the promotion machine because analysts get behind stocks and can keep them propelled in an up direction well beyond reason.
Rule 24: Explain Your PicksBuying stocks is a solitary event, too solitary in fact, so always make sure you can articulate your reasoning to someone else.
Rule 25: There's Always a Bull MarketIt's OK if you have to work hard to find it, just don't default to what's in bear mode because you are time-constrained or intellectually lazy.
Rule 1: Bulls, Bears Make Money, Pigs Get SlaughteredIt's essential for all traders to know when to take some off the table.
Rule 2: It's OK to Pay the TaxesStop fearing the tax man and start fearing the loss man because gains can be fleeting. More
Rule 3: Don't Buy All at OnceTo maximize your profits, stage your buys, work your orders and try to get the best price over time.
Rule 4: Buy Damaged Stocks, Not Damaged CompaniesThere are no refunds on Wall Street, so do your research and focus your trades on damaged stocks rather than companies.
Rule 5: Diversify to Control RiskIf you control the downside and diversify your holdings, the upside will take care of itself.
Rule 6: Do Your Stock HomeworkBefore you buy any stock, it's important to research all aspects of the company.
Rule 7: No One Made a Dime by PanickingThere will always be a better time to leave the table, so it is best to avoid the fleeing masses.
Rule 8: Buy Best-of-Breed CompaniesInvesting in the more expensive stock is invariably worth it because you get piece of mind. More
Rule 9: Defend Some Stocks, Not AllWhen trading gets tough, pick your favorite stocks and defend only those. More
Rule 10: Bad Buys Won't Become TakeoversBad companies never get bids, so it's the good fundamentals you need to focus on. More
Rule 11: Don't Own Too Many NamesIt can be constraining, but it's better to have a few positions you know well and like. More
Rule 12: Cash Is for WinnersIf you don't like the market or have anything compelling to buy, it's never wrong to go with cash.
Rule 13: No Woulda, Shoulda, CouldasThis damaging emotion is destructive to the positive mindset needed to make investment decisions.
Rule 14: Expect, Don't Fear CorrectionsIt is not always clear when a correction will strike, so expect and be prepared for one at all times.
Rule 15: Don't Forget BondsIt's important to watch more than stocks, and bonds are stocks' direct competition.
Rule 16: Never Subsidize Losers With WinnersAny trader stuck in this position would do well to sell sinking stocks and wait a day.
Rule 17: Check Hope at the DoorHope is emotion, pure and simple, and trading is not a game of emotion.
Rule 18: Be FlexibleRecognize and be open to the unexpected shifts in the market because business, by nature, is dynamic, not static.
Rule 19: When the Chiefs Retreat, So Should YouHigh-level executives don't quit a company for personal reasons, so that is a sign something is wrong.
Rule 20: Giving Up on Value Is a SinIf you don't have patience, think about letting someone who does run your money.
Rule 21: Be a TV CriticAccept that what you hear on television is probably right, but no more than that.
Rule 22: Wait 30 Days After PreannouncementsPreannouncements signal ongoing weakness, wait 30 days to see if anything has gotten better before you pull the trigger to buy.
Rule 23: Beware of Wall Street HypeNever underestimate the promotion machine because analysts get behind stocks and can keep them propelled in an up direction well beyond reason.
Rule 24: Explain Your PicksBuying stocks is a solitary event, too solitary in fact, so always make sure you can articulate your reasoning to someone else.
Rule 25: There's Always a Bull MarketIt's OK if you have to work hard to find it, just don't default to what's in bear mode because you are time-constrained or intellectually lazy.
Friday, January 14, 2011
Ken Heebner - America's hottest investor
Never mind the rocky market. After a string of supersmart calls, mutual fund manager Ken Heebner is putting up the best numbers of his sterling career.
http://money.cnn.com/2008/05/23/magazines/fortune/birger_americas_hottest_investor.fortune/
http://money.cnn.com/2008/05/23/magazines/fortune/birger_americas_hottest_investor.fortune/
Fed Economist To Greenspan In 2005: Discovery Channel's 'Flip That House' Should Cause 'Existential Crisis'
One economist raised a point at that Dec. 13 during a meeting of the Federal Open Makret Committee that could have brought home the case that the Fed had let the housing market spin out of control.
"I offer one more piece of evidence that I think almost surely suggests that the end is near in this sector. While channel-surfing the other night, to the annoyance of my otherwise very patient wife, I came across a new television series on the Discovery Channel entitled 'Flip That House,'" economist David Stockton said, prompting a roomful of laughter according to the transcript. "As far as I could tell, the gist of the show was that with some spackling, a few strategically placed azaleas and access to a bank, you too could tap into the great real-estate wealth machine. It was enough to put even the most ardent believer in market efficiency into existential crisis. [Laughter]"
http://www.huffingtonpost.com/2011/01/14/fed-economist-greenspan-flip-that-house_n_809138.html
"I offer one more piece of evidence that I think almost surely suggests that the end is near in this sector. While channel-surfing the other night, to the annoyance of my otherwise very patient wife, I came across a new television series on the Discovery Channel entitled 'Flip That House,'" economist David Stockton said, prompting a roomful of laughter according to the transcript. "As far as I could tell, the gist of the show was that with some spackling, a few strategically placed azaleas and access to a bank, you too could tap into the great real-estate wealth machine. It was enough to put even the most ardent believer in market efficiency into existential crisis. [Laughter]"
http://www.huffingtonpost.com/2011/01/14/fed-economist-greenspan-flip-that-house_n_809138.html
Bruce Berkowitz interview
http://bcove.me/agph2w5v
Fairholme now has $20B in assets under managment as of early Dec. 2010.
Can't time the market - buy stressed securities
Compare what we are paying for the cash they expect to get inthe future
Come up with a thesis. Hire experts to destroy their thesis. Don't want to talk to yes people. Want people to tell them why their thesis is wrong. Want their ideas to be disproven.
Holding cash - worst situation is if you are backed into a corner - e.g. too early to an investment and don't have ability to buy more. The great investors never run out of cash. Always want to have a lot of cash - cash can be very valuable when nobody else has it.
Fairholme now has $20B in assets under managment as of early Dec. 2010.
Can't time the market - buy stressed securities
Compare what we are paying for the cash they expect to get inthe future
Come up with a thesis. Hire experts to destroy their thesis. Don't want to talk to yes people. Want people to tell them why their thesis is wrong. Want their ideas to be disproven.
Holding cash - worst situation is if you are backed into a corner - e.g. too early to an investment and don't have ability to buy more. The great investors never run out of cash. Always want to have a lot of cash - cash can be very valuable when nobody else has it.
Bill Priest - Apple versus Microsoft
http://bcove.me/wtg81yy5
Shareholder yield strategy. Microsoft - 7% yield (cash plus share buy back) + double digit growth rate. Microsoft entering a remarkable period. The financial fundamentals - very attractive.
Oracle has entered a mature phase. So big, needs to big give money back to shareholders. Good at integrating acquisitions. The will be giving a dividend. Needs to maintain low cost of capital so can continue acquiring firms. 6% shareholder total yield.
Shareholder yield strategy. Microsoft - 7% yield (cash plus share buy back) + double digit growth rate. Microsoft entering a remarkable period. The financial fundamentals - very attractive.
Oracle has entered a mature phase. So big, needs to big give money back to shareholders. Good at integrating acquisitions. The will be giving a dividend. Needs to maintain low cost of capital so can continue acquiring firms. 6% shareholder total yield.
A story goes with it
Charles Schwab’s Jeffrey Ryan examines the opportunities and risks inherent in “story” stocks, including this significant, if not surprising, caveat: “Our research indicates that the stocks that analysts rate best, presumably those with the best or most powerful stories, tend to underperform the market in general.”
http://www.schwab.com/public/schwab/research_strategies/market_insight/investing_strategies/stocks/a_story_goes_with_it.html
http://www.schwab.com/public/schwab/research_strategies/market_insight/investing_strategies/stocks/a_story_goes_with_it.html
Sunday, January 9, 2011
Interesting article about Successful Former Truck Driver Investor
Jack Weyland specializes in biotech investing.
http://blogs.forbes.com/schifrin/2010/11/12/a-warren-buffett-next-doors-top-5-biotech-buys/
http://marketocracy.com/mds/investors/jackweyland
He attributes much of his success to the book "The Psychology of Judgment and Decision Making" by Scott Plous, Ph.D.
http://blogs.forbes.com/schifrin/2010/11/12/a-warren-buffett-next-doors-top-5-biotech-buys/
http://marketocracy.com/mds/investors/jackweyland
He attributes much of his success to the book "The Psychology of Judgment and Decision Making" by Scott Plous, Ph.D.
Seth Klarman's Margin of Safety
One of the best books ever written on investing.
"Risk-Averse Value Investing Strategies for the Thoughtful Investor"
http://www.my10000dollars.com/MS.pdf
"Risk-Averse Value Investing Strategies for the Thoughtful Investor"
http://www.my10000dollars.com/MS.pdf
Berkshire Focus Fund - BFOCX
A tiny mutual fund that a has high variability in returns. Berkshire did very well in 2010.
"The Focus Fund normally concentrates its investments in a core group of 20-30 common stocks selected for their long-term growth potential. In selecting investments for the Fund, management focuses on industry leaders with dominant franchises and strong growth prospects. The Fund may concentrate at least 25%, and as much as 100%, of its assets in the securities of companies in the technology industry."
http://www.berkshirefunds.com/top.jsp
"The Focus Fund normally concentrates its investments in a core group of 20-30 common stocks selected for their long-term growth potential. In selecting investments for the Fund, management focuses on industry leaders with dominant franchises and strong growth prospects. The Fund may concentrate at least 25%, and as much as 100%, of its assets in the securities of companies in the technology industry."
http://www.berkshirefunds.com/top.jsp
CGM holdings
Focus Fund (CGMFX)
http://moneycentral.msn.com/investor/partsub/funds/holdings.asp?Funds=1&Symbol=CGMFX
http://www.cgmfunds.com/pdf/2010-06-30-mutual-quarterly.pdf
Realty Fund (CGMRX)
http://moneycentral.msn.com/detail/stock_quote?Symbol=CGMRX%2C
Mutual (LOMMX)
http://moneycentral.msn.com/detail/stock_quote?symbol=LOMMX&ww=1
http://moneycentral.msn.com/investor/partsub/funds/holdings.asp?Funds=1&Symbol=CGMFX
http://www.cgmfunds.com/pdf/2010-06-30-mutual-quarterly.pdf
Realty Fund (CGMRX)
http://moneycentral.msn.com/detail/stock_quote?Symbol=CGMRX%2C
Mutual (LOMMX)
http://moneycentral.msn.com/detail/stock_quote?symbol=LOMMX&ww=1
Charley Munger on Wikipedia
http://en.wikipedia.org/wiki/Charlie_Munger
Go to External Links:
Latest Holdings in Berkshire Hathaway Portfolio, Dynamic
Charlie Munger - Treasure Trove
Charlie Munger - A Compilation
Speech at USC, May 2007
Three Speeches by Charlie Munger
Audio: Standard Causes of Human Misjudgment
Charlie Munger Link Collection
Munger Speeches & Writings
Munger's Speech on Mental Models
"In the Money" (2001 Harvard Law Bulletin article)
Munger's Worldly Wisdom (1994 USC Business School)
The Psychology of Human Misjudgment by Munger (1996 at Harvard Law School)
Charlie Munger's Lollapalooza Effect and This Credit Fiasco (2008)
Munger Says 'Thank God' U.S. Opted for Bailouts Over Handouts (Bloomberg article) (2010)
Go to External Links:
Be Your Own Fund Manager
The author of this article recently came around to the view that I have come around to the view of fellow columnist Ken Fisher that portfolios of individually purchased stocks are better for a lot of investors.
Read this article at:
http://blogs.forbes.com/baldwin/2010/11/30/be-your-own-fund-manager/
Read this article at:
http://blogs.forbes.com/baldwin/2010/11/30/be-your-own-fund-manager/
Forbes 2010 Mutual Fund Guide
After a dismal performance in 2008, fund managers regained some of their swagger in 2009. The average domestic stock fund returned 32.7% to shareholders last year, easily outpacing the S&P 500, up 26.8%.
Unless you are a wizard at shorting investments, it is easier to make money in a rising market than in a falling market. Our mutual funds report will not only help you identify funds likely to increase the value of your portfolio during the good times, but will also show you how to preserve capital at times when investors are panicking.
Continued at:
http://www.forbes.com/2010/01/19/mutual-funds-investors-grades-mutual-funds-2010-personal-finance-intro.html
Unless you are a wizard at shorting investments, it is easier to make money in a rising market than in a falling market. Our mutual funds report will not only help you identify funds likely to increase the value of your portfolio during the good times, but will also show you how to preserve capital at times when investors are panicking.
Continued at:
http://www.forbes.com/2010/01/19/mutual-funds-investors-grades-mutual-funds-2010-personal-finance-intro.html
Morningstar Picks Top Mutual-Fund Managers of Year for 2010
Jan. 5 (Bloomberg) -- Bob Goldfarb and David Poppe of Sequoia Fund, Brent Lynn of Janus Overseas and Michael Hasenstab of Templeton Global Bond were named mutual-fund managers of the year for 2010 by Morningstar Inc.
Continued at:
http://www.businessweek.com/news/2011-01-06/morningstar-picks-top-mutual-fund-managers-of-year-for-2010.html
“These managers posted exceptional gains -- enough to overcome the difficult market environment of the past few years,” Karen Dolan, director of mutual-fund analysis for Chicago-based Morningstar, said today in a statement.
Continued at:
http://www.businessweek.com/news/2011-01-06/morningstar-picks-top-mutual-fund-managers-of-year-for-2010.html
Meet the Managers Behind the Top Funds .
Mutual-fund managers have seen better days. More than a quarter of actively managed stock funds trailed the indexes they're measured against by five percentage points or more in the first nine months of 2010 -- their worst performance since 1998, according to J.P. Morgan.
But there are still managers who shine year in and year out. Each year, SmartMoney whittles the 6,800 mutual funds available in the U.S. down to a few standouts that consistently outperformed their peers -- without charging sky-high fees. Here, the top finishers in four major categories.
Continued at...
http://online.wsj.com/article/SB10001424052748704030704576070404141362100.html
But there are still managers who shine year in and year out. Each year, SmartMoney whittles the 6,800 mutual funds available in the U.S. down to a few standouts that consistently outperformed their peers -- without charging sky-high fees. Here, the top finishers in four major categories.
Continued at...
http://online.wsj.com/article/SB10001424052748704030704576070404141362100.html
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