Happy Hour: Calm and Angst

The popular world view is short term and technology has only helped to shrink that view. That’s why being a contrarian to that perspective is a big advantage for investors. But should we pay attention to the short term?

The media has been circling like vultures for an opportunity like this since the last market correction in May 2011 because nothing draws eyeballs like high volatility and a correction. Continue Reading…

Some Perspective On One-Day Market Losses

I spent some time Monday morning watching reactions to the stock market. Thanks to social media, everyone has a front row seat to the greatest sideshow on Earth – investor behavior. Monday did not disappoint.

I have two Twitter accounts, one for the site where I follow a wide range of financial types (broken into groups: top finance, financial advisors, value investors, and financial media. BTW, value investors were the most calm – well done!) and a personal account that follows non-finance folks. Continue Reading…

Happy Hour: Fantasy or Reality

Football is a few weeks away. For fantasy football fans, that means drafts are starting soon. I thought I’d go slightly off topic, though not really because investing and fantasy sports tend to have similar patterns of behavior.

Put another way, similar mistakes and biases abound in both. So we can take what we know from investing and apply it to fantasy football or vice versa. In either case, hopefully, this post gives you something to think about while you prepare for both. Continue Reading…

Marks on His Investment Philosophy

Howard Marks gave a talk at Google back in March ’15 where he covered the origin of his investment philosophy. I scribbled some notes as watched it. I thought it was time to organize things and post it here.

His book, The Most Important Thing, is his investment philosophy. He admits that his most important things have changed over time. His thinking is always evolving. The goal was to show that investing is hard, counterintuitive, and to teach people how to think.

During the talk, Marks highlights where the roots of his philosophy started: Continue Reading…

Happy Hour: Thinking Ahead

The drivers of total return are dividends and changes in price. Dividends are driven by fundamentals. Price is driven by fundamentals and sentiment.

Fundamentals are the basic measures of business – the growth or decline in revenues, profit margins, earnings, etc. Fundamentals drive long-term returns.

The short-term driver is investor sentiment. By sentiment, I mean investors willingness to pay more or less for current fundamentals. Continue Reading…