Posts Categorized: Finance

Black Gold (Energy Part I)

My great-grandfather, Ignatius Aloysius (“I.A.”) O’Shaughnessy, was born in 1885, exactly 100 years before I was born. From very humble roots in Stillwater, Minnesota, he built one of the country’s most successful private oil companies: Globe Oil. Once honored as the “king of the wildcats,” I.A. built a huge fortune and then slowly gave it…

Humans: Hertz Machines In A Megahertz World

Most debates in investing focus on strategy: active or passive; hedge funds or private equity; gold or inflation protected bonds.  But while these debates are important (and fun), the most important element of investing success is your behavior. Trouble is, culture (e.g. markets) evolve quickly, but human beings evolve very slowly. We are left with…

Boring Is Good

I’ve always liked investing rules, because they impose discipline. Here is one rule I find useful: boring investments are good investments. The more boring the investment, index, or asset class, the better it will probably be for your portfolio. This has been true throughout market history, and the rule manifests everywhere: ·         Trading less often…

Reading List July 2014

A few books for the Summer, to receive these lists every month, sign up here    Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration by Ed Catmull, Amy Wallace This book was launched with tons of buzz, and deservedly so. It’s one of the most entertaining and useful business…

Consumer Staples, Part II

 “We see change as the enemy of investments…so we look for the absence of change. We don’t like to lose money. Capitalism is pretty brutal. We look for mundane products that everybody needs.” Warren Buffett In Consumer Staples, Part I, I explored the unique nature of consumer staples stocks and their impressive historical returns. In…

What Drives the Market’s Return on Equity?

Earning a high return on equity is one of the primary reasons to do business. Managers of (and investors in) companies want to earn the highest return on their equity as possible, and sustain this high rate of return over as long a period as possible. Some sectors of the market, like consumer staples, have…

Investor Behavior: The Final Frontier

Jack Bogle and Vanguard have been incredibly good for the investing business. They’ve made equity markets more accessible to investors and have minimized the cost of investing to the point that it is almost free. As a result, the market share of index funds has risen from the low single digits in 1990 to nearly…

We Are All Factor Investors

Smart beta, indexing, Fama/French, margin of safety, Graham (deep) value, growth, momentum, GARP. Each of these terms represent very different styles of investing, but they all have one thing in common: they are all predicated on the fact that certain factors have, and will continue to, drive stock returns. ·         Smart Beta: fundamental-weighting, low volatility…

The Power of Share Repurchases

One of the most effective stock selection strategies in the U.S. over the past several decades has been to buy stocks that are in the midst of repurchasing significant quantities of their shares—but just blindly following buybacks isn’t always the best strategy. While many companies that are repurchasing large quantities of their shares make for…