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Everyone wants to know what they can make. “What type of returns can we expect going forward?” gets asked a lot. What follows is a explanation of how cheap or expensive the market is and some educated guess on expected returns over the next several years.
So you end up getting something like this: Continue Reading…
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People often confuse investing and gambling but the parallels actually run deep. The confusion lies in comparing most forms of gambling – slot machines, roulette, lotteries – where the house sets the odds with those where the players set the odds. The house sets the odds in its favor. The house – not you – is guaranteed to win the longer you play.
Unlike most forms of gambling, horse racing odds are set by the betting public. The odds change based on where the money flows. In that context, understanding horse racing might offer some insights into investing, which is where this post is heading. Continue Reading…
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One thing Howard Marks does well is take the prevailing market view and flip it on its head. You can see it in a couple interviews he did in late September. Both interviews are brief and there is some overlap in topics, so I’m just going to pull out a few highlights.
Here’s his response to a question about how low yields and high multiples make this market extremely risky: Continue Reading…
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Philip Fisher was a growth investor before growth investing was a thing. He shared his philosophy based around his 15 points in the best seller Common Stocks and Uncommon Profits.
In 1987, he sat down for a rare interview for Forbes. Most of the interview centered around his investing philosophy, which I’ll cover below. Continue Reading…
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History and math. Those were my favorite subjects growing up. Still are, mostly. The math I do is very basic compared what I learned. History hasn’t changed. There’s something about the past – where we came from and how we got here – that is always intriguing.
I came across this the other day in The Snowball: Continue Reading…
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Ben Graham wrote a series of articles for Forbes in the summer of 1932. The basis for the articles was to get some relief to existing shareholders during the worst of the Great Depression. He had this wild idea that management should put shareholders first. And in turn, it offers a perspective of market history you won’t find in a chart.
At the time, many companies were hoarding cash – collected a few years earlier near the market peak – due to the uncertainty surrounding the economy. Yet, these companies were selling for less than their asset value and, in some cases, selling for less than their cash equivalents. Continue Reading…