Happy Hour: Offense and Defense

Most people only want to look at the upside. How much money can I make? How big of a return can I get? Big wins are important.

Few people ask, “How much can I lose?”

You should always play offense and defense with your portfolio. Continue Reading…

Happy Hour: Work Simply

For some reason, the idea of contrarianism has popped in my head these past few days (probably from something I read but can’t remember what). The idea of a contrarian view gets tossed around a lot in investing.

Understandably, if you want to outperform most investors you need to invest differently, independent from most investors. You’re betting against the crowd, which is not an easy thing to do. It can feel like you’re trying to walk into a stadium just as the game is letting out. Most people understand this concept, but few actually follow through with it successfully because they give up before they get to their seat. Continue Reading…

Happy Hour: Mindless Selling

In the last post, I covered a few of Seth Klarman’s investing principles from a presentation he gave to a Columbia MBA class. He briefly discussed one place he looks for opportunities. Klarman likes to take advantage of mindless selling.

One of the downsides of mutual funds and index funds are the rules defining what a fund can and can’t own. The rules dictate what gets bought or sold. Klarman offered up a couple examples: Continue Reading…

Happy Hour: Mispriced Moats

Sanjay Bakshi is the latest to do a Talk at Google (link to the video). Bakshi, an MBA professor, teaches about behavioral financial and valuation.

In the talk, Bakshi discusses five areas where the market misprices a moated business because it’s given the wrong label: Continue Reading…

Happy Hour: Digging into the Past

Last week, I pointed out that experience is a great teacher for those willing to learn. But it can be a slow process at times. The best way to speed it along is to study history.

The best example I have is learning from market extremes. Despite the constant talk of bubbles and crashes, the market spends most of its time away from these extremes. Continue Reading…

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…