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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…
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Everyone has their opinions and beliefs. Some are based on facts. Others are based on some aberration of our mind.
Investing is full of facts. The relentless stream of data can be used to argue anything. And it’s used to support every opinion possible because facts can say whatever you want them to say.
Your job and mine is to come to some consensus about what to believe or not. Below, I’ve laid out some of my own beliefs developed over the years. You can decide which is more opinion than fact.
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I spent an hour yesterday watching the latest Talks at Google featuring Donald Yatckman (I embedded the video below). Half the video was spent in Q&A, so it was a short talk. Overall, it’s a perfect example of investing being simple but not easy.
Usually, I share some quotes and thoughts around an idea discussed in these talks. This time, I thought I’d share my full notes. Continue Reading…
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Investing has a few basic truths we should accept: strategies require time and human nature often acts against our best interests.
Time is a dual problem – time required to do the work and time for the strategy to work. I’m dealing with the former which is the point of this post.
I’ve flirted with the idea of changing strategies over the past year. A lack of time gives me the excuse to move forward. Continue Reading…
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Fortune has a good article on the flat market we’ve experienced so far this year. It gets into the possible reasons why, what history has to say about what to expect next, and why you shouldn’t read too much into it.
I have a simpler answer. Markets need to pause every once in a while. Continue Reading…
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Baseball is one of the few sports where you can fail 70% of the time and still have a great year. Players are paid millions to do just that. And the mutual fund industry follows a similar model. But I digress.
Only 13 MLB players have breached the .400 barrier since 1900. In 1941, Ted Williams hit .406 while the league average was .262.
He was the last to do it. He was one of the greatest hitters ever because of his tireless work ethic, obsession for hitting knowledge, and discipline.
Over time, Williams simplified his batting process down to only swinging at good pitches he could hit. He stacked the odds in his favor.
Always a fan of analogies, Buffet uses Williams’ process to explain his investment philosophy: Continue Reading…