Novel Investor • Compounding investing wisdom...

Ben Graham’s Four Principles

March 23, 2016

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Jon

There’s a business behind most investments. Graham’s last bit of wisdom in The Intelligent Investor points to this – investing makes you an owner (stocks) or a claimant (bonds) of a business. Your success is a product of the businesses ability to earn money and pay its debts.

In the age of index funds, I think it’s easy for investors to overlook this fact. They’re one step removed. They own shares of a fund. And because they own shares of a fund, the returns of said fund become more important than the performance of the businesses held by the fund. Continue Reading…
Happy Hour: Models

March 18, 2016

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Jon

The last post covered a few things in the FCIC interview with Warren Buffett. One thing I want to touch on briefly is something Buffett kept mentioning – models.

I wish the interviewers would have asked a few follow-up questions because he kept referencing it. Here’s Buffett: Continue Reading…
Buffett Explains Bubbles

March 17, 2016

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Jon

Back when the financial crisis was in full blown collapse mode the government stepped in to shore up the problem areas and infused a huge amount of reassurance in the financial system. It was like a giant hug for the markets, for the people, and anyone else that needed one, that said, “things will be okay”.

Then the government did what all governments do best. Congress formed a committee to investigate why it happened. They needed a villain. So the FCIC, Financial Crisis Inquiry Committee, was created to find who or what was to blame. Continue Reading…
Happy Hour: Seven Long Years

March 11, 2016

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Jon

The bull market in stocks turned seven years old this week and nobody noticed. The Wall Street Journal pointed out the anniversary, then proceeded to ask why aren’t people more excited? Of course, the article cites a long list of things to worry about as the reason. It’s not necessarily wrong, but it’s not right either. There’s always something to worry about.

The real reason is much simpler. It’s hard to get excited about something you missed. Continue Reading…
When Graham Found Momentum

March 9, 2016

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Jon

Popularity is fleeting. For some, it only lasts the proverbial “15 minutes”. For others, it drags on longer than any rational person can comprehend.

We see this in people and things. It explains why fads come and go. It eventually ends because there are not enough new eyeballs to replace the ones that lose interest or something newer and shinier comes along to draw our attention away.

Ben Graham noticed this popularity effect on stocks and briefly covered it in The Intelligent Investor: Continue Reading…
Happy Hour: Fantasy Politics

March 4, 2016

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Jon

Politically speaking, I’m agnostic. Both parties do a great job of making fools of themselves and I do my best to ignore it to maintain sanity. That’s not to say they don’t have a decent idea now and then, but it happens so rarely of late it’s really not worth spending much energy on it.

Really, it’s mentally exhausting. Emotionally, it must be a nightmare and it defies common sense. And yet people still get emotionally attached.

But this is not a political post. Continue Reading…

Ben Graham’s Four Principles

Happy Hour: Models

Buffett Explains Bubbles

Happy Hour: Seven Long Years

When Graham Found Momentum

Happy Hour: Fantasy Politics