This post will probably be too brief, but here goes.  The most important aspect of analysis is trying to gauge any sort of sustainable competitive advantage.  Qualitatively, do they really have something special going that other are unlikely to imitate?  Second, do they fit their paradigm?  If they are growth investors, do they use momentum?  If they are value investors, are they willing to be wrong for a while?

Third, how do they handle lesser questions like earnings quality?  Do they look at cash flow, free cash flow or earnings, and how do they justify their answers?  Do they have a decent decisionmaking process, given that managers that trade less tend to do better?

Finally, have they been successful?  Do they win, and do they win for the reasons that their methods would favor? Good track records that emerge for reasons other than managerial intentions are unlikely to be repeated.

Now what don’t I look at?  Sharpe ratios and other quantitative measures of risk.  The measures aren’t predictive of future performance, and the risk adjustment is too short term in nature.  These measures are backward looking, and not indicative of future performance.  Better to spend time sweating over how a manager chooses assets, limits risks, etc., than to focus on quantititive measures of risk that have no relation to long term performance.

Hi.  I’m back home, and happy, before a one-day turnaround where I leave again.  We were able to get the business of the church done one day ahead of schedule.  While at the meeting, I had no internet… there is something odd about my laptop that blocked them from connecting me, and, they messed up my laptop in trying to connect me, so that I can’t use my dedicated line.  Kinda sad.

One quick rant because when you get a boatload of e-mail at once, things get clearer.  I think someone has created a mailing list for economics/finance bloggers, because I have a number of semi-interesting press releases in my e-mail.  They would be interesting, but there are over a dozen of them, and none of them really fit my profile, aside from a professor asking me to review an academic finance article. (Me?! I’m on the hinterlands of the profession.)  I appreciate truly personal mail, but the faux personal mail, which is really PR, does not get me to move.

One other note: while I was away, since I did not have internet, during free time, I went through my files to cull through research that I downloaded to be read.  By the time I was done, I went through about 200 articles, and added 20 or so to my research files.  I could do a post on what I think is valuable in academic/professional finance research — I’m not sure how much my readers would value it.  That said, going through the research sharpened my views on what I think is valuable in academic research… so, at least I gained something from it.

I should be able to post more tomorrow, beyond that, I have no idea what kind of connectivity I might have.