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What would Warren do? Now there’s a question. Safe guess, it’s not what most people would do.
Tomorrow (i.e. Saturday), the most anticipated annual letter is published. You can find it here.
Why Saturday? Because of what Warren doesn’t do. It prevents shareholders from making rash decisions without thinking through the annual results. Investors are forced to reflect all weekend before they act on Monday. Continue Reading…
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Optimism has a funny way of feeding off itself sometimes, bleeding into enthusiasm and excess. You’ve seen this story before with the internet boom and the housing bubble.
But before that, it led to the rise of the 1920s, where people like John J. Raskob fueled the easy money market that “Everybody Ought to be Rich”. Raskob’s bold claim in the August 1929 issue of Ladies’ Home Journal was typical for the time: Continue Reading…
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Liquidity is a short term risk. If you want to sell now, and nobody wants to buy, then you have liquidity risk. You have to lower the price until it’s attractive enough for someone else to buy it.
The issue with ETFs, index funds, and even actively managed funds, is the false impression that these funds are highly liquid when in fact they are only as liquid as the underlying assets. A high yield bond fund has the same liquidity risk as the bonds it holds. A microcap fund has the same liquidity risk as the microcap stocks it owns. Continue Reading…
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If you’re staring at your portfolio thinking now is the time to make some changes, I can say with almost absolute certainty you’re wrong.
A lot of people are thinking the same thing. It’s a popular view at the moment. That might sound like good news but it’s not. Following the popular path – where thinking and behavior are concerned – rarely ends well. Continue Reading…
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There has been a growing upheaval in investing as we throw out overused theories and reintroduce behavior, redefine risk, and question labels that have been used for decades.
None of this is new. It was simply written off and ignored for a perfect and faulty efficient market belief. Ben Graham offered up behavior’s role in investing back in 1949 with the story of Mr. Market. After that, emotion was magically removed from the markets and common sense has finally brought it back. Continue Reading…
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I started rereading The Intelligent Investor this week and wanted to share a quote. The discussion revolved around the view at the time – this was about 1970 – that investors should consider an all-stock allocation due to the worry of higher inflation.
Of course, there’s always something to worry about and Graham’s answer fits a broader allocation question that gets asked all the time – should I own more or less of something else because of the worry of the day? Continue Reading…