Category Archives: Portfolio Management

Book Review: Berkshire Beyond Buffett

It’s time to change what Warren Buffett supposedly said about his mentors: “I’m 85% Ben Graham, and 15% Phil Fisher.” For those who don’t know, Ben Graham is regarded to be the father of value investing, and Phil Fisher the father of growth investing.  Trouble is, Warren Buffett changed in his career such that this […]

Risk Tolerance — The Ability to Deal with Loss

No one knows their financial “risk tolerance” outside of the context of losing money.  Part of the trouble is that risk and return are often described in the same breath as if they are inseparable, when they are more weakly related than most think, and certainly not linear. Surveys, no matter how well-intentioned or -designed […]

Mantra: Interest Rates Have to Rise, Interest Rates Have to…

I thought of structuring this post like a fictional story, but I couldn’t figure out how to make it good enough for publication.  Well, truth is often stranger than fiction, so have a look at this Bloomberg article pointing at a 37% loss in the ProShares UltraShort 20+ Year Treasury (TBT). A few points to start […]

Even with Good Managers, Volatility Matters

This is another episode in my continuing saga on dollar-weighted returns. We eat dollar-weighted returns.  Dollar-weighted returns are the returns investors actually receive in a open-end mutual fund or an ETF, which includes their timing decisions, as opposed to the way that performance statistics are ordinarily stated, which assumes that investors buy-and-hold. In order for […]

Factor Glut

I use factors in my investing. What *are* factors, you ask?  Factors are quantitative variables that have been associated with potential outperformance.  What are some of these factors? Valuation (including yield) Price Momentum (and its opposite in some cases) Insider Trading Industry factors Neglect Low Volatility Quality (gross margins as a fraction of assets) Asset shrinkage […]

Numerator vs Denominator

Every now and then, a piece of good news gets announced, and then something puzzling happens.  Example: the GDP report comes out stronger than expected, and the stock market falls.  People scratch their heads and say, “Huh?” A friend of mine who I haven’t heard from in a while, Howard Simons, astutely would comment something […]