Every financial panic needs a good person to blame. This one can be blamed on securitizers and financial derivatives engineers; the one before on deluded dot-com investors, the one before (the junk bond collapse) on frenzied, ill-advised mergers, and the one before that (the Latin American debt crisis) on the oil crisis. I’ve skipped the […]
The deeper I get into investing, the more I find my interests are aligned with those of our corporate overlords. Thus, even though a piece of legislation is objectively progressive and fair, I also have to view it in terms of how it tilts the power away from the fat cats. Such is the case […]
Benjamin Graham wrote in Security Analysis that there are few tests of management competence and none of them scientific. This was in the 1951 edition of his book, and in almost 60 years there have been few improvements. One reasonable test, however, is management’s opportunism and understanding of the broad economic climate. Although “proactive” is […]
Shorting stocks is widely considered dangerous. The old adage is that “Stocks can only fall to zero, but they can rise to infinity.” I’ve always been unsatisfied with this explanation, because I’ve never seen a stock actually rise to infinity, and if I did see one I would short it. The problem with shorting is […]
On a forum I visit regularly there was a post when a novice investor asked if there was a good beginner stock that he could learn the ropes with. The general consensus was that there is no such thing as a beginner stock; all stocks were viewed as extremely complex generators of investment returns, full […]
A great deal of analysis is devoted to ferreting out a company’s true earnings. It may be necessary, for example, to adjust asset impairment costs if the reality is not that the assets suddenly became impaired but that the company overpaid for them to begin with. Benjamin Graham’s Security Analysis devoted a significant number of […]
Of course, the previous post is common knowledge. By way of example, and to illustrate a strategy that commonly arises from market misconception (I’m glad to say I thought of before I read an excellent out-of-print book, Margin of Safety by value investor Seth Klarman) is to buy the junk bonds of a company and […]