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Wise Words from Philip Carret

January 31, 2020

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Jon

Philip Carret has one of the longest successful track records on Wall Street. But before his Wall Street career, he was a pilot in WWI, a Harvard graduate, and finally a reporter for Barron’s.

A series of articles for Barron’s led to his first book, The Art of Speculation. In it, he describes his concept of value investing.

In 1928, Carret founded the Pioneer Fund, one of the first mutual funds in the US. The fund got off to a horrible start thanks to the ’29 crash and the Great Depression. But they both survived. And despite the early losses, the fund performed phenomenally over the 55 years he ran it.

I think it’s safe to say Carret practiced the art of patient investing longer than anyone. He was still managing money when he died in 1998 at the age of 101. Thankfully he shared some of his (almost) eight decades of investing experience over the years.

Here’s Carret: Continue Reading…
Phil Fisher: Scuttlebutt and Assessing Management

January 30, 2020

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Jon

Most of the great investors are divided over the need for qualitative analysis. The two biggest areas are measuring management and moats.

Both sides make solid arguments because you’re trying to assess something that can’t be easily measured. That’s why qualitative analysis is more art than science. Put simply, some people got it, some people don’t (like me).

Those who are gifted in the art — like Buffett, Fisher, and Lynch — have an innate ability that normal humans don’t have…and their returns show it.

However, the likes of Graham and Schloss did quite well despite taking the other side of that argument. They didn’t think they could successfully do it, so they avoided talking to management like the plague.

Of course, both sides are correct…investors do better when they stick with what they’re (honestly) good at and avoid the rest.

That said, Phil Fisher mastered qualitative analysis. He wanted a company with great management at a reasonable price. He felt management was the most important ingredient to separate a business from its rivals. Continue Reading…
Why a Bull Market Ends

January 22, 2020

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Jon

When? That’s what everyone wants to know. The answers to why a bull market ends come pouring in the second the when is confirmed.

But the explanations why are usually complex. They certainly won’t help anyone predict the next turn. They’re often secondary, or scapegoats, to what really happened.

The 1982-87 bull market is a good example. The five year period saw steady gains in most quarters: only 5 out of 20 quarters were negative, with no declines of as much as 10%. And 1987 started off hot, up 21% in the first three months, before peaking in August.

The bull market that culminated in Black Monday ended because…Computers! Computerized trading, that is. That one gets piled on all the time. Portfolio insurance and leverage also got blamed. And they sound good too. Continue Reading…
Quantitative Momentum by Wesley Gray & Jack Vogel

January 15, 2020

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Buy the Book: Print | eBook

Gray and Vogel introduce the theory behind momentum, what drives the effect, why it should persist, and how to build an improved quantitative momentum strategy that exploits the sustainable edge in investor misbehavior.

The Notes

Continue Reading…
Quarterly Reading – Winter ’20

January 10, 2020

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Jon

It’s a short list this quarter. My book reading took a hit because studying took over my reading time. It will likely remain the case for most of this year.

Here’s what I’ve been reading the past three months: Continue Reading…
Secondary Lessons from The Intelligent Investor

January 8, 2020

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Jon

An outsider not familiar with Benjamin Graham might see The Intelligent Investor as an investing book past it’s prime.

The book was first written in 1949. The fourth and last edition revised by Graham was printed in 1973. Graham regularly used current stocks and market events to keep examples and case histories fresh. Even the strategies Graham presented where timely. So it’s understandable if some readers label it “outdated.”

But those same readers probably want something tangible. There will always be a supply of people wanting a secret formula or metric, a short cut to easy gains. It’s human nature. And the publishing industry supplies that demand. The investing genre is filled with long-forgotten books like that because the formulas only last an instant.

What matters is Graham’s primary lessons on Mr. Market and margin of safety are still relevant, even though they may be applied different today. And his secondary lessons are too. Here are just a few examples that come to mind. Continue Reading…

Wise Words from Philip Carret

Phil Fisher: Scuttlebutt and Assessing Management

Why a Bull Market Ends

Quantitative Momentum by Wesley Gray & Jack Vogel

The Notes

Quarterly Reading – Winter ’20

Secondary Lessons from The Intelligent Investor