Common stocks, bonds, active investing and the power of compounding
Almost all investors will know about compounding. But, it’s hard to get through your head what it can really do.
Part 1: The Field of Play
Want better returns? Forget risk. Focus on fear
In effect they acknowledge that going down the Capital Asset Pricing Model rabbit hole with Alice did not get them to Wonderland. Their solution is to go further down the same rabbit hole.
Random Walk fallacy in investing
The defining feature of randomness of a series of data is that each data event be independent from all other data events in the series.
Investors are more anxious about the economy than at any time in recent memory – true or false
He’s encouraging a kind of groupthink or social proofing. He tells us that everyone he talks to says there’s more reason for anxiety than in recent memory. He is inviting us to believe it is true.
Volatility and risk – How the investment industry got it wrong
The riskiness of an investment is not measured by beta (a Wall Street term encompassing volatility and often used in measuring risk) but rather by the probability — the reasoned probability — of that investment causing its owner a loss of purchasing power over his contemplated holding period.
Drawdowns, inefficient markets and a portfolio managed by God
The concept of this research is to capture results associated with a long-term investor (we assume a 5-year holding period) that has incredible stock-picking skill
Active investing in today’s investment landscape
Most trading that is going on right now has nothing to do with value
Tariffs and their long-term impact on the stock market
As with the British Corn Laws in the early 19th century, tariffs will raise prices for consumers while profiting business owners, even those whose operations cannot compete on a level playing field with global competition. It’s amazing to think that U.S. consumers will probably face higher prices than consumers all over the world. Trump’s billionaire cronies will do just fine. The average American will not.
Legendary investors’ approach to market plunges
Like rainy days, we simply have to prepare ourselves and put up with them. And like rainy days, if we are in the umbrella business, we can take advantage of them.
Sentiment and the four faces of risk
Ironically, the four faces of risk reverse actual risk. Risk is perceived to be highest in bear markets; moderate in sideways markets; increasingly lower in bull markets; and, more or less ignored, in bubbles.
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