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 […]

Books

David Einhorn and Reasons Why Widely Followed Stocks Get Mispriced

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Over the weekend I was reading David Einhorn’s book Fooling Some of the People All of the Time. I’ve had it on my bookshelf for some time, and it has always taken a back seat to other books until I decided to pick it up recently. It’s an entertaining read, basically recounting his short thesis on Allied Capital in great detail. It is a good book because it provides a glimpse into the significant amount of research and due diligence […]

Investment Philosophy

James Tisch Investment Philosophy and Some Thoughts on Loews

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“Buy when everyone else is selling and hold until everyone else is buying.” -J. Paul Getty I recently came across a transcript of a talk that James Tisch gave to a group of students at Columbia. Tisch runs Loews (the conglomerate, not the home improvement store). Loews (L) has struggled in the past few years, but the long term investment record is outstanding. The stock price has compounded at 17% over the past 50 years. I’ve never invested in Loews—the operating results of […]

Case Studies

Risk and Portfolio Management Similarities between Joel Greenblatt and Stanley Druckenmiller

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I have been busy over the past couple of weeks. My wife gave birth to twins about two weeks ago, and now that I am back in the office, I am catching up on some reading. While we were in the hospital for about a week, I did have some time to do some reading, and I have some comments on two annual reports of current holdings of mine—JP Morgan and Markel—which I may turn into brief posts. But briefly, […]

Investment Philosophy

Simple Concept of Intrinsic Value Part 2

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I wrote a post recently on intrinsic value, and I received some comments and questions that made me think a lot of readers are still looking for a formula to calculate a stock’s value precisely. I really don’t think this is the case. I think the best result that an investor can hope to achieve when it comes to appraising business values is to come up with a fairly sizable range of values, and then wait for the market to […]

Case Studies

Portfolio Turnover–A Vastly Misunderstood Concept

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A while back I wrote a post about how the gap between 52 week high and low prices presents an opportunity for investors in public markets. I mentioned that this simple observation (the huge gap between yearly highs and lows) is all the evidence you need to debunk the theory that markets are efficiently priced all the time. I think the market generally does a good job at valuing companies within a range of reasonableness, but there is absolutely no […]

Ben Graham

The Simple Concept of Intrinsic Value

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“The newer approach to security analysis attempts to value a common stock independently of its market price. If the value found is substantially above or below the current price, the analyst concludes that the issue should be bought or disposed of. This independent value has a variety of names, the most familiar of which is “intrinsic value”. – Ben Graham, Security Analysis (1951 Edition) Graham went on to say this about the definition of intrinsic value: “A general definition of intrinsic […]

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 […]

Investment Philosophy

Market Truisms and Quarterback Controversies

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Long time readers of the blog know that I’m a big sports fan, and occasionally I’ll use analogies from the sports world to make a point on investing. There are many flaws in the efficient market hypothesis. And no, I don’t think that stocks are always mispriced. I think that much of the time stocks fluctuate in a range that could be considered a fair estimate of intrinsic value. But just not all the time, and this creates opportunity. There […]

Investment Philosophy

Some Thoughts on Investment Strategies and Buffett’s 1966 Disney Investment

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There seems to be a strange dichotomy in the value investing universe: those who buy so-called compounders, and those who buy so-called cheap stocks. I want to own businesses that are building value, but that doesn’t mean I don’t care about valuation. I pass on probably 99% of the ideas I look at, many of which are great businesses, simply because the current price won’t allow my investment in the stock to compound at the rate of return that I’m […]