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In my view, these were my best posts written between May?and July?2014:
Look to the Liabilities to Understand the Assets
Why do new asset classes work very well for a time and then fail?
Learning to live with uncertainty and thrive amid it.
People don’t need assets as much as they need streams of income derived from the assets (dividends, capital gains) that allow them to purchase the goods and services that they want and need. ?(Low interest rates mean assets aren’t worth as much.)
Some naively say, ?Dividends don?t lie.? ?Well yes, the money you receive is yours, but is the company as healthy after the dividend? ?Will they be able to keep it up? ?Often that is not the case.
A Bond Manager Thinks about the Equity Premium
This is a more logical way to think of the equity premium by decomposing it into three more understandable parts: yield curve slope, credit spread, and?economic earnings.
How I think about Buying and Selling Stocks
Investment Management: A Science to Teach or an Art to Learn?
It is better to have an accurate uncertainty, than an inaccurate certainty. ?We are better of professing ignorance of what we don?t know, than being certain about things where we are wrong.
Self-Regulation in the Financial Markets: My Thoughts
Self-regulation is a better idea in theory than practice. ?Either it needs to be regulated, or not. ?Adversarial regulation is unavoidable if regulation is needed.
The guy from the National Futures Association emphasized the idea that mandatory membership in the association as a requirement to do business was paramount for an SRO and I can see that. ?The SRO then has the ?death penalty? hanging over the heads of those they regulate. ?That said, consider this: the CFA Institute may dream of the day when all involved in investing *must* hold a?CFA Charter.
I have no doubt that this would be a good thing. ?Ethics codes are good for the industry, and to kick out bad apples would be a good thing.
Whether on a micro-level (a business) or on a macro-level (a government) the way to build value comes from a simple concept. ?What can I/we do to enable the goals of others? ?Growth and success come through service.
The Tails of the Distribution do not Validate the Mean
Asset classes that average in the results of astounding successes and total failures do not adequately represent what can happen to individuals in their specific investments.
What are the significant?costs and benefits of investing in illiquid assets?
The Value That Investment Advisers Deliver
Registered Investment Advisers [RIAs] offer value to their clients in 10 ways, most particularly helping them to not sell in a panic or buy out of greed.
The value of having income that you can’t outlive
Pity the Multiemployer Pension Plans
Why many of these pension plans will fail
On Berkshire Hathaway and Asbestos
Why Berkshire Hathaway reinsures a huge amount of all of the asbestos claims outstanding
On Learning Compound Interest Math
Why it is important for everyone to learn it.
What does it take for a big failure of any sort to occur, despite some planning?
The Reason for Failure Matters
How to see in advance how failures can indicate that a bigger problem is here, or not.
Why most people who read Buffett don’t understand the value of insurance float properly. ?It is valuable, but not as valuable as naive acolytes of Buffett believe.
Full disclosure: long $BRK/B for clients and me