Posts Categorized: Finance

Mass Movements in Money Management

Wouldn’t it be great to create a mass movement that improved lives and/or created a successful business? Like so many phenomena which recur through history, mass movements have a sort of formula. This formula is a great tool for sales, for innovation, for creating communities, and for building new categories within an existing business. There…

Lessons from Market Extremes

We know that markets overdo it at extremes. At the market level, we call these bubbles or manias, panics or crashes. At the stock level, we call them glamour and value. Let’s collect some lessons from the best performing stocks from the two categories where investors have the most extreme (good or bad) expectations for…

The Best Books on Creativity

Two or so times per year, I share one of the emails which I send out to members of our growing book club, which just passed 3,500 people. Below, I share my favorite list of books in a while. Over the past 6-12 months, I’ve read almost 50 books on my favorite topic: creativity. I…

The Best Quote from the Last Five Investing Books I’ve Read

The $10 I spend on a book buys me a batch of passages and notes. I love to extract the best bits of good books. With some books, I highlight more than 100 passages. 20 is more typical. Here is my single favorite passage from the last five investing books I’ve read (I had to…

A History of The Price-to-Sales Ratio

Price-to-sales is a very simple ratio. Arguably, it is the least nuanced and therefore least manipulated valuation measure. A sale, for the most part, is a sale. Unlike earnings, book value, and other fundamental measures which are sometimes more opinion than fact, sales is a more straightforward number. To be fair, there are still issues like aggressive revenue-recognition and…

Is it now smart to be dumb?

Maybe one of the only ways to outsmart a group of really smart people is to hold positions that seem very dumb. The dumbest stocks to hold might be those with the lowest consensus expectations for the future. The best way to find stocks for which the market has very low expectations is to use…

Using the Price-to-Book Ratio

Having explored the history of the price-to-book ratio, we can now turn to its usefulness as a stock selection criterion. The data suggests a few important points about the price-to-book ratio: It has worked quite nicely in small-cap It has not worked as well in large-cap stocks Price-to-book delivers the best returns when it is used…

Lessons From A Weekend With Special Forces

I spent the weekend with a U.S. Army Special Forces team. Their captain—my best friend from childhood—was getting married. Many members of the team were Rangers before graduating to Special Forces and had done several tours in the Middle East. The best man—a captain of another Special Forces team and a Ranger school classmate of…

Why Reading Books Is the Best Thing You Can Do

I was asked a fun question the other day: what is your top advice is for new college graduates? On CNBC, several of us answered the question, and my advice was simple: read as many books as possible. If you want to be interesting, interested, successful, and happy, then there is no substitute for reading….

The Original Value Factor: Price-to-Book

Cheaper stocks have outperformed the market – Everyone As I write and think about “factor investing,” I worry about what Aruther Koestler called the “struggle against the deadening cumulative effect of saturation.” Value investing was revolutionary when Graham was writing about it, and was still fairly revolutionary when Fama/French, Lakonishok, and–shameless plug–Jim O’Shaughnessy (among others) were exploring it…