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.
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
And here’s the difference between the bursting of true stock market bubbles and other stock market routs. When the Dot Com bubble burst it took many many, years for the fallen to recover.
By timing we mean the endeavor to anticipate the action of the stock market – to buy or hold when the future course is deemed to be upward, to sell or refrain from buying when the course is downward. By pricing we mean the endeavor to buy stocks when they are quoted below their fair value and to sell them when they rise above such value.
If the CAPM is flawed, what can replace it? The best approach would be to assess whether companies in general and relatively speaking, the company in question, can raise money cheaply in public offerings.
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.
Rising prices are a narcotic that affect the reasoning power up and down the line
Warren Buffett terminated his partnership, paid out his investors and went to cash. That’s the only time in his many decades of investing that he has taken such radical action.
I would say there’s been a great increase in the number people doing dumb things. And they do big, dumb things.
In good years, if not in all years, they retain a part of their profits and put them back in the business.
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