General Thoughts

General Thoughts on Portfolio Management and Diversification

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“Ship your grain across the sea; after many days you may receive a return. Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” –Ecclesiastes 11:1-2 Investors have always discussed and debated the merits of diversification—apparently even as far back as the days of King Solomon (although his definition of diversification—7 or 8 “ventures”—might not sit well with modern day portfolio theory and mutual fund managers who often hold 30, 50, or 100 […]

Case Studies

Outerwall, Buybacks, and Activists

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Outerwall is a stock that has been struggling as the cash flows from Red Box are drying up much faster than investors have expected. Not only that, but Outerwall management has had the troubling habit of throwing good money after bad by “investing” in things like ecoATM–kiosks that allow you to turn in your old cell phones for cash, a concept that doesn’t seem to be gaining traction. This spending on business lines that were unlikely to succeed was all in an […]

General Thoughts

Long-term Thinking and Back to Basics

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When markets are tumbling, it’s time to get excited about stocks. This is often talked about, but rarely practiced. J. Paul Getty once said the key to getting rich is simple: “Buy when everyone else is selling and hold when everyone else is buying”. For the value investing community, Buffett’s famous “Be greedy when others are fearful” basically is the same gist. Commonly referenced and preached, but far less often practiced. I am lucky to have a great client base at […]

Case Studies

Focusing on the Investment Process

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“It is the basics. It is focusing on selection, low prices, and reliable, convenient, fast delivery. It’s the cumulative effect of having this approach for 14 years. I always tell people, if we have a good quarter it’s because of the work we did three, four, and five years ago. It’s not because we did a good job this quarter.” – Jeff Bezos, 2009 The new year is always a good time to review your investment process. The other day, […]

Books

The Misunderstanding of Peter Lynch’s Investment Style

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“I’ve never said, ‘If you go to a mall, see a Starbucks and say it’s good coffee, you should call Fidelity brokerage and buy the stock.’” – Peter Lynch I saw an article in Monday’s Wall Street Journal on Peter Lynch. Basically, it was a very brief piece where Lynch basically says that people are misinterpreting his advice to “buy what you know”. I like Peter Lynch and I like his writing. Although the first book I ever read on value […]

General Thoughts

Lessons Learned from A History of Oil

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Since oil prices were in the headlines yesterday after an 8% fall, I thought it might be a good time to comment on something I’ve been working my way through while putting in the miles after a day of looking for bargains. I’m about halfway through the excellent series of podcast called “A History of Oil”. It’s an outstanding series that starts by introducing George Henry Bissell—the father of the oil industry—who in 1853 began experimenting with “rock oil” that […]

Charlie Munger

Being Cheap, Best of Munger, a Rare Bezos Interview, and Other Links

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I was catching up on some links and articles this weekend. Sometimes, things that are interesting but not time sensitive get pushed to the back burner. In these cases, I sometimes create a file filled with things that I’d like to read and the early morning Saturday hours are sometimes a good time to catch up on these things. Anyhow, here are some things I’ve read recently that I read that I thought readers might be interested in taking a […]

General Thoughts

A Few Thoughts on Reducing Unforced Errors

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This weekend I came across a link to an excellent Manual of Ideas interview with Allan Mecham that I’ve read before, but I decided to read through it again. There are a few key points that Mecham brings up that I think are really worth repeating, so I thought I’d highlight them here. Investing is not easy, but it should be simplistic. Here are some points worth keeping in mind: Understand What You Are Buying The first is the concept of understanding a […]

General Thoughts

Walking, Thinking, and Investing

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I just came across an article I just read that I thought was interesting, and thought certain readers might enjoy. Although the article has nothing directly to do with investing, I think there are some takeaways for those of us in the investment world. Certainly the article has relevance to anyone whose chosen endeavor requires the occasional deep thinking. The article is called “Why Walking Helps Us Think”. The article—as you probably guessed from the self-explanatory title—describes the benefit of […]

General Thoughts

The Stock Market: A Look at the Last 200 Years

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I spend virtually zero energy thinking about the overall stock market. I’m always aware of what the indices are doing, but I really don’t pay attention to where I think they are headed or where they’ve been recently. As Munger has said, sometimes the tide will be with us and sometimes it will be against us, but the best thing to do is to just continue to focus on swimming forward. I think this has been going on for well […]