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Investing Lessons From Ted Williams

July 29, 2015

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Jon

Baseball is one of the few sports where you can fail 70% of the time and still have a great year. Players are paid millions to do just that. And the mutual fund industry follows a similar model. But I digress.

Only 13 MLB players have breached the .400 barrier since 1900. In 1941, Ted Williams hit .406 while the league average was .262.

He was the last to do it. He was one of the greatest hitters ever because of his tireless work ethic, obsession for hitting knowledge, and discipline.

Over time, Williams simplified his batting process down to only swinging at good pitches he could hit. He stacked the odds in his favor.

First You Need a Good Ball to Hit

Always a fan of analogies, Buffet uses Williams’ process to explain his investment philosophy: Continue Reading…
Happy Hour: Marks on Cycles

July 24, 2015

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Jon

If you’re not listening to the Masters in Business podcast, you’re missing out. The podcast has become a free, weekly course on investing, business, psychology, and more. I set aside time some time each week to listen. If you have any interest in learning more, subscribe and do the same. You won’t regret it.

This week’s guest teacher was Howard Marks. Marks is one of the most followed people in the industry because of his Memos. Continue Reading…
Investor Returns When the Market Seems to Go Nowhere

July 22, 2015

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Jon

Show a chart of a bear market and I guarantee someone will say: The market went nowhere for years. What a terrible investment! Who would want to own stocks that long just to break even? How are you supposed to make money if it happens again?

Of course, it’s true. The market did go nowhere. Invested money went somewhere. An index, like the S&P 500, is not the same as investor returns.

To the untrained eye, the assumption is investors made no money during that time. I’m sure many investors didn’t. But some investors did. And neither’s returns looked anything like the chart. Continue Reading…
Happy Hour: Munger on Cash Hogs

July 17, 2015

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Jon

I ran across a PDF where Charlie Munger explains the important difference between companies that make more money than they know what to do with (cash cows) versus companies that always need cash to maintain growth (cash hogs).

So cash cows are obviously better than hogs. And the best cash cows have some type moat – pricing power, economies of scale – and a great capital allocator. See’s Candy is a good example. Continue Reading…
A Reason to Avoid High Yield Bonds

July 15, 2015

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Jon

I’m not a fan of high yield bonds. I say this because I subscribe to the view that stocks drive returns while bonds help cushion any falls.

I know this because when the stock market acts crazy, investors consistently run from stocks into bonds for safety. High-quality government bonds benefit and help offset stock losses.

However, high yield bonds don’t. Continue Reading…
Happy Hour: China Rout

July 10, 2015

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Jon

In the last post, I mentioned that China’s stock market is in freefall since about the middle of June and how it would be a great case study in investor behavior.

My lack of elaboration caused some confusion around the statement and the chart. So I thought I’d clear one thing up – the MSCI China Index is very different from China’s stock market.

Continue Reading…

Investing Lessons From Ted Williams

First You Need a Good Ball to Hit

Happy Hour: Marks on Cycles

Investor Returns When the Market Seems to Go Nowhere

Happy Hour: Munger on Cash Hogs

A Reason to Avoid High Yield Bonds

Happy Hour: China Rout