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Warren Buffett has been dispensing wisdom in Berkshire shareholder letters since 1965. Over that time, he transformed the company from a decent business with a great investment portfolio to a conglomerate of great businesses with a decent investment portfolio.
The transformation was done at a rate of a 20.8% return (based on market value) or a 1,972,595% gain over that period. Mind boggling.
Buffett’s latest letter doesn’t fall short on things to learn. Continue Reading…
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The 2017 version of the Credit Suisse Global Investment Returns Yearbook is out and available for download. The Yearbook, for those who don’t know, is a great resource for historical returns nerds like me. It takes a long view of market returns from 1900 to today for five asset classes and 23 countries.
The available Yearbook is only the summary version but it still has 60 pages worth of great info and charts like this: Continue Reading…
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Charlie Munger is one of those rare people who figured out that being less stupid is more important than being brilliant. The Daily Journal Annual Meeting is one of two places to see Charlie Munger hold court each year. As always, he doesn’t hold back when dispensing his wit and wisdom, especially on avoiding stupidity.
I won’t cover every minor detail. It’s better to listen to it or read it – I transcribed the entire Q&A session and you can grab a copy in the Library – when you get the chance. But Charlie did return to a few big ideas, which I want to highlight below. Continue Reading…
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Sports analogies for investing get overused. I’m going to continue that tradition here (don’t hate me).
The point of having a plan is so you can effectively play both sides of the court. Without a plan, you essentially play offense or defense but rarely both, leaving yourself exposed on the other end.
The typical mistake of buying high and selling low is repeated ad nauseam. There’s a good reason. Without a plan, the “plan” devolves into choosing one over the other. That mentality drives the focus on whatever has happened most recently in the market. Great returns become chased returns and poor returns are fled from. Continue Reading…
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A long-standing theory suggests that the market will become more inefficient as more money gets indexed. You’re welcome to argue the validity of if/when that might happen. I believe it’s possible but unlikely to happen on a grand scale anytime soon. But I also believe index funds create pockets of inefficiency that nimble investors can pick at.
The opportunities are due to changes in the underlying index and the reaction by index funds to keep up. Seth Klarman refers to it as mindless selling: Continue Reading…
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I’ve been going over Buffett’s Lecture at the University of Florida from 1998. I believe it’s one of his better lectures, maybe because his answers are less scripted than in recent years. You still hear the themes he repeats today only his answers are more in-depth.
One of the questions offered to him is about diversification, which I found interesting. His answer is one he’s repeated several times since in a similar form, yet for some reason it stands out. Continue Reading…