Posts Categorized: Finance

Does Value Still Work?

Everyone knows about value investing now, and everyone is tilting towards value, so its going to stop working. Everyone is saying this to me lately–sometimes as a question, sometimes as a statement of fact.  Yogi Berra famously said, “no one goes to that restaurant anymore, its too popular.” Is the same thing happening to value? The…

What Millennials Want (Or, How You Can Win Their Business)

Millennials are still in the very early stages of market participation: those under 35 own just 4% of mutual fund assets, but the 80-90 million millennials will soar in importance to everyone in the wealth/asset management business before too long. Through inheritance alone, millennials stand to receive $30 trillion in the next few decades. Where…

Why The Grandpa Portfolio Will Crush The Millennial Portfolio

Ever heard that joke about how if you are young and you aren’t a democrat, you have no heart, but if you are old and you aren’t a republican, you have no brain? Well, there seems to be something similar happening with the portfolios of young and old investors. Stocks with the youngest median owners are…

The Very Cheapest Stocks (Price/Book) Do Very Badly

Book to price is a bad value factor. It is a decent stock selection factor overall, but relative to the other ways of measuring value (earnings to price, cash flow to price, EBITDA/EV, etc) it is sub par.  I’ve been interested lately in very concentrated value portfolios, and found it interesting that when running very…

More on Profit Margins

Jesse Livermore has a characteristically great and thorough look at U.S. profit margins up on his website, which I highly recommend.  I’ve written about margins a few times in the past and find them fascinating. Jesse’s key point is how important financial and technology stocks are to current U.S. profit margins, so I thought I’d…

Buffett wisdom that you may not have heard before

I work hard to not quote or invoke Warren Buffett too often. His wisdom is ubiquitous and he doesn’t need another preacher. But I came across some unique insights from Mr. Buffett through a third party that I feel compelled to share. These notes came from Jason Ke Wang (@Wangkejason), a graduate student earning his…

How Sherlock Holmes Can Make You A Better Investor

Successful investing can only result from good thinking or good luck. Because we only control the former, I am always on the lookout for books about the process of thinking. One such book is A Few Lessons from Sherlock Holmes. Holmes’s approach is rules-based, disciplined, and often unconventional: three hallmarks of many successful investors and superior investing…

Technology Cash Machines

You’d be uncomfortable if you didn’t have enough cash to pay your bills, right? Well its the same story for companies–its good to have cash to cover your short term liabilities. I was curious how balance sheets looked today by a measure called the cash ratio, which is a convenient measure of short-term liquidity. The…

5 Predictions for 2015

1.       Everyone will continue to make predictions despite overwhelming evidence that predictions are useless. My father has been an incredible mentor, but you’d be surprised how few investing lessons he’s ever taught me. There were never lessons about ratios or sectors or discounted cash flows. Instead when I was growing up there was just one…

Value + Momentum: The Tortoise and the Hare

Buy cheap stocks, or follow the trend? Two conflicting (and often exact opposite) strategies that have both worked well through market history. Momentum, when it’s working well, can be unstoppable for years. When it’s not working, it can lead to horrendous results relative to the market. Value has been steadier, but it too undergoes periods…