Amazon is the steamroller of today’s economy. When it enters a new sector – watch out – competitors may not be there tomorrow. Amazon went public 20 years ago and already the stock is up to over $1,000 a share. A $10,000 investment in Amazon 20 years ago is worth nearly $5 million today. Many […]
News
Lessons from the Gates Foundation…
The Bill and Melinda Gates Foundation is all about going big and bold and tackling the world’s hardest problems. Its guiding principle is that “All lives have equal value.” Its aims are to get more young children to survive and thrive, to empower the world’s poorest people, to combat infectious disease and to inspire people […]
The Madness of Mobs or The Wisdom of Crowds?…
For most of the last 50 years, economists have supported the idea that markets are “efficient” and that securities prices fully reflect all available information. This theory about how markets function (the Efficient Market Hypothesis or EMH) is based on a set of laws that describe how investors behave (they are rational and profit maximizing) […]
The 2-Minute Thought: Purposeful Reading For Investors
So much to read, so little time. . . The lament of investment portfolio managers everywhere is the never-ending struggle with unread newspapers, journals, corporate filings, speeches, investment research, and good books. How do you get through it all and cover all you feel you should know? The frustration is age-old. Even Roman philosopher Seneca […]
The 2-Minute Thought: On Getting Better With Age
In 2014, Lewis H. Lapham wrote a wonderful essay for The New York Times Magazine called “Old Masters” with the subtitle “After 80, some people don’t retire. They reign.” It profiled people in their 80s — and beyond — getting better and better at what they do. The profiled individuals spanned a wide range of […]
The 2-Minute Thought: Industry Concentration, Monopoly Power
The conventional wisdom today is that U.S. stock prices are high and a correction is due. But what if stock prices actually can stay elevated for a long time to come? U.S. stock valuations have been high for longer than many expected. As Jeremy Grantham of money manager GMO shows in the chart below, the […]
The 2-Minute Thought: Lying and Deception
Do you think that when people lie, they avoid eye contact, fidget, or stutter? It’s a widespread belief across cultures. But it is not so. Gaze aversion, posture shifting, rapid eye blinking, and similar cues do not help us detect dishonesty. That’s one of the surprises of a recent research study published by CFA Institute […]
The Science of Football…and Also Investing?…
Back in March 2008 we wrote a piece about football (only we Americans call it soccer). Football matches are low scoring affairs often decided by just one goal. When a penalty kick is awarded, the Goalkeeper is just 36 feet away from the shot taker and has all of 0.2 to 0.3 seconds to react. […]
Whistling Past the Grave Yard?…
We don’t usually discuss technical analysis. We are fundamental analysts with a long time horizon. We practice Value investing, looking for companies whose shares are trading cheap relative to earnings and assets. Technical analysts argue that everything that you need to know about future stock prices is embedded in past prices and volume. But two […]
Update on the Korean Peninsula…
A lot has been happening on the Korean Peninsula, both North and South. In our March newsletter we covered the impeachment of South Korea’s former president Park Geun-hye and public fury over political corruption. Since then, former President Park has been arrested; the first liberal South Korean president in a decade, Moon Jae-in, has been […]
What We Do When We Don’t Know…
Humans have evolved to be great at many things. We are uniquely able, for example, to master complicated speech patterns and engage in complex reasoning. But the big brains that make these things possible can also get us into trouble. In situations where there is a lot at stake and where the outcomes are uncertain, […]
The 2-Minute Thought: The Best Way for Individual Investors to Compete
Individual investors often forget that active investment is a competition. It is you against the person on the other side of the trade. If you are buying, you should always be thinking about what the seller knows that you don’t. Michael Mauboussin and his colleagues Dan Callahan and Darius Majd at Credit Suisse wrote as […]
