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Howard Marks released a new memo (PDF) this week on risk. It’s a revised and updated version of a memo he wrote last year. Being that the topic is risk, it’s worth a read. I thought I’d highlight a piece of it.
One thing people are not good at managing, especially around investing, is risk. And that’s an understatement. People are generally terrible at it. Continue Reading…
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I finally got around to reading Simple Wealth, Inevitable Wealth by Nick Murray after seeing it mentioned several times online. You might be able to find a used past edition on Amazon, but your best bet is to buy it new from Nick Murray’s site (the book deserves a much broader reach).
For non-finance folks, the book should be refreshing. Murray dispenses with the financial-ese and puts things into simple, common sense terms that anyone can understand and focuses on the timeless ideas that matter.
I dug through all my notes and picked out ten lessons from the book. Continue Reading…
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I re-read Ben Graham’s The Interpretation of Financial Statements this week. It’s a manual on, you guessed it – how to read financial statements. Okay, it’s not a thriller, but it’s barely 100 pages long and you can finish in an afternoon between naps.
At the end of the book, he briefly covers the difference between stock prices and values. This was 1937. Graham was well ahead of his time: Continue Reading…
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A big mistake investors make is expecting more than what’s possible in the time allowed. In other words, they expect too much or too little in too short a time. The internet boom was built on this. The housing bubble was too.
But this condition isn’t specific to bubbles. Rather, two bubbles in 10 years raised our expectation of asset bubbles. Now we’re constantly looking for bubbles.
Which gets me to my point. Continue Reading…
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I ran across an interesting article in The Atlantic on the advantages of being a jerk versus being nice and how both fit into the business world. The author covers several case studies before boiling it down to what works best between the two.
But it got me thinking about how it relates to investing, like the prediction sideshow that drives financial media and why some people hang on every word. Continue Reading…
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Last week I broke down a 60/40 portfolio’s performance by decade. I was curious what drove performance in a diversified portfolio – stocks or bonds – and decades were a quick way to find out. But not the best way. It was pointed out that using economic cycles was a better way to break it down.
Thanks to some help finding the dates to changes in the economic cycle, and scrounging up monthly performance data, I was able to get a 60/40 portfolio’s performance during recessions and expansions. Continue Reading…