As the year comes to a close, it’s a good time to review some of the lessons from the more popular posts of 2020.
Below, you’ll find a collection of posts on a range of topics. The posts are a product of interesting things I’ve read this year and felt was worthy of sharing.
The best part is I have no clue what post will gain traction once I hit publish. So the list below is entirely the fault of the readers. Thanks for reading and sharing!
In the list, you’ll find some wisdom from Buffett, Graham, and Fisher. Peter Bernstein made the list twice. A few posts cover growth companies, major drawdowns, and the difficulty of holding on. And then there’s the history to remind us how often today’s market events rhyme with the past.
There should be something for everybody. Let’s dive right in.
A 90-Year-Old’s Tale of Compounding – 2020 marked Warren Buffett’s 90th birthday. His life is a lesson in extreme compounding.
Phil Fisher: The Art of Holding On – Phil Fisher’s strategy is dependent on finding a few great companies that can grow at a high rate of return over a long period of time…and then actually hold on to it. It’s not as easy as it sounds.
Enduring Drawdowns in Wonderful Companies – The chance of any stock experiencing a deep drawdown at least once in its lifetime is fairly high. The post highlights research from Henrik Bessembinder that covers how often some of the best companies, along with its shareholders, experienced big drawdowns.
What Makes Great Companies Great – Finding great companies in advance is not easy, especially using quantitative metrics. The post highlights Bessembinder’s research looking for consistent characteristics between the greatest companies of the last several decades.
Why the Worst Companies Lost Big and How to Avoid Them – Avoiding losing companies is a great way to hold on to your money. the post highlights Bessembinder’s research into quantitative metrics that might help identify the worst performers.
The Man Who Made a Killing on the 1929 Crash – Floyd Odlum was an opportunist at the depths of the 1929 crash. While most of the country ran scared from stocks, Oldum bought out investment trusts for literal pennies on the dollar and made a fortune in the process.
Investing Advice from 1937, Still Relevant Today – Fred C. Kelly wrote a short column for Barron’s over a six-month period leading up to the 1937 crash. It was well-timed investing advice on human nature.
There are Weeks Where Decades Happen – I originally wrote this a few days before it was published out of frustration from a lack of response to what was going on at the time. It was March, in the midst of the market crash, initial shutdowns, and before Congress passed the bailout. This is the cleaned-up version of a wishlist of sorts of what I hoped to see as a national response to the virus. Sadly, my wish was not granted. The bailout was inadequate and the national response to the virus was nonexistent. Thankfully, we have a vaccine today — a phenomenal achievement in so short a time. Now, all we have to do is make it through the winter.
Peter Bernstein’s Checklist for “Growth Companies” – Bernstein wrote this mostly qualitative checklist in 1956 to help identify growth companies worth owning over the long run.
Repeated Lessons in Buffett’s Partnership Letters – I made a point to read Buffett’s partnership letters at the beginning of the year. This post covers repeated lessons on the benefits of compounding, how a benchmark helped Buffett set expectations for his clients, and the importance of staying in your circle of competence. You can find the complete notes on his partnership letters here.
Warren Buffett: Market Pricing, Not Timing – During Warren Buffett’s partnership days, a few of his clients felt obligated to tell him that stocks would continue to fall, following an 8% decline in 1966, and he should do something about it. This was his response.
The Secret Sauce in the System – Peter Bernstein explains in his typical eloquent way why the combination of uncertainty and human behavior creates a cycle of risk-taking and risk-aversion.
Secondary Lessons from The Intelligent Investor – The primary lessons of Ben Graham’s classic can be found in Chapters 8 and 20 — his parable of Mr. Market and the importance of margin of safety. But his book is filled with secondary lessons on practically every page. This post highlights a few of those secondary lessons found in the book.