These articles appeared between May and July 2011:
Yes, I wrote them both, but they complement each other. Yes, most average people get skinned investing in common stocks, but if you apply yourself assiduously to investing, it will improve your performance in other jobs, by broadening your skill set.
The latter of (part 1) these was my highest day and month for access of my blog. I came close to eclipsing the monthly total last month, but missed by 2%. These pieces take up asset allocation via valuation, and momentum.
A story of how Roy and I disobeyed orders a little, and created a lot of growth for the company that we served. Personally, I think this is a great story… I never created more value than when I worked for Provident Mutual.
I like to think that I am an intelligent skeptic on derivatives; in this case credit risk fights any real hedging.
The smaller the range of choices is, the better people do in choosing. One way to facilitate that is to break down decision making into a series of choices with each having few options.
All assets represent future goods. The prices of assets represent the trade-off between present goods and assets.
Rapid money supply growth with no consumer price inflation can only really occur within the confines of an asset price bubble, or else, where does the money go? Interest rates are low at such a time because of the incredible liquidity, and complacency of lenders that they will get an equal amount of purchasing power back. Perhaps another possibility is when a country’s currency is being used more and more as a shadow currency, like the US in the Third World. But even that will come home someday.
This is probably one of the most important articles I have written, because investment returns are lumpy, and we need to learn to live with it. For those of us that are smart, we need to take advantage of it.
Liquidity cannot be created, but it can be redirected.
Cash is valuable even when interest rates are low. Cash is flexibility and optionality.
Madoff’s Ponzi scheme lasted so long because it raked off so little.
On the tradeoff of liquidity in order to get yield.
It also taught me a lesson. When fees are deducted daily, no one notices.
Now after all of this, it’s not so much a question of rationality but ethics. Who will do the right thing for the one he ultimately serves? Working for those people is a joy, and is beneficial to those that own. Doing right does well for many.
On why credit ratings are opinions, and not facts.
How to preserve purchasing power, even when it is difficult.
Don’t buy REITs that are not publicly traded.